a. Assuming that Maynard's dividend payout rate and expected growth rate remain constant, and that the firm does not issue or repurchase shares, estimate Maynard's share price. b. Suppose Maynard decides to pay a dividend of $1.00 this year and use the remaining $2.00 per share to repurchase shares. If Maynard's total payout rate remains constant, estimate Maynard's share price.
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Maynard Steel plans to pay a dividend of $3.00 this year. The company has an expected earnings growth rate of 4.0% per year and an equity cost of capital of 10.0%.
a. Assuming that Maynard's
b. Suppose Maynard decides to pay a dividend of $1.00 this year and use the remaining $2.00 per share to repurchase shares. If Maynard's total payout rate remains constant, estimate Maynard's share price.
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- Maynard Steel plans to pay a dividend of $2.82 this year. The company has an expected earnings growth rate of 3.9% per year and an equity cost of capital of 9.5%. a. Assuming that Maynard's dividend payout rate and expected growth rate remain constant, and that the firm does not issue or repurchase shares, estimate Maynard's share price. b. Suppose Maynard decides to pay a dividend of $0.95 this year and use the remaining $1.87 per share to repurchase shares. If Maynard's total payout rate remains constant, estimate Maynard's share price. a. Assuming that Maynard's dividend payout rate and expected growth rate remain constant, and that the firm does not issue or repurchase shares, estimate Maynard's share price. Maynard's share price will be $ (Round to the nearest cent.)Maynard Steel plans to pay a dividend of $2.89 this year. The company has an expected earnings growth rate of 3.7% per year and an equity cost of capital of 10.9%. a. Assuming Maynard's dividend payout rate and expected growth rate remain constant, and Maynard does not issue or repurchase shares, estimate Maynard's share price. b. Suppose Maynard decides to pay a dividend of $0.98 this year and use the remaining $1.91 per share to repurchase shares. If Maynard's total payout rate remainsconstant, estimate Maynard's share price. c. If Maynard maintains the same split between divdends and repurchases, and the same payout rate, as in part (b), at what rate are Maynard's dividends, earnings pershare, and share price expected to grow in the future? Note: The share price is expected to also grow at the same rate as dividends and earnings per share.Mackenzie Company has a price of $37 and will issue a dividend of $2.00 next year. It has a beta of 1.2, the risk-free rate is 5.4%, and the market risk premium is estimated to be 4.8%. a. Estimate the equity cost of capital for Mackenzie. b. Under the CDGM, at what rate do you need to expect Mackenzie's dividends to grow to get the same equity cost of capital as in part (a)? a. Estimate the equity cost of capital for Mackenzie. The equity cost of capital for Mackenzie is %. (Round to two decimal places.) b. Under the CGDM, at what rate do you need to expect Mackenzie's dividends to grow to get the same equity cost of capital as in part (a)? The expected growth rate for dividends is | %. (Round to two decimal places.)
- Maynard Steel plans to pay a dividend of $3.15 this year. The company has an expected earnings growth rate of 3.5% per year and an equity cost of capital of 9.5%. Assuming that Maynard's dividend payout rate and expected growth rate remainconstant, and that the firm does not issue or repurchase shares, estimate Maynard's share price. Suppose Maynard decides to pay a dividend of$1.09 this year and use the remaining $2.06 per share to repurchase shares. If Maynard's total payout rate remains constant, estimate Maynard's share price.Mackenzie Company has a price of $32 and will issue a dividend of $2.00 next year. It has a beta of 1.1, the risk-free rate is 5.9%, and the market risk premium is estimated to be 4.8%. a. Estimate the equity cost of capital for Mackenzie. b. Under the CDGM, at what rate do you need to expect Mackenzie's dividends to grow to get the same equity cost of capital as in part (a)? a. Estimate the equity cost of capital for Mackenzie. The equity cost of capital for Mackenzie is %. (Round to two decimal places.)Anle Corporation has a current price of $16, is expected to pay a dividend of $1 in one year, and its expected price right after paying that dividend is $24. a. What is Anle's expected dividend yield? b. What is Anle's expected capital gain rate? c. What is Anle's equity cost of capital?
- Anle Corporation has a current price of $29, is expected to pay a dividend of $1 in one year, and its expected price right after paying that dividend is $30. a. What is Anle's expected dividend yield? b. What is Anle's expected capital gain rate? c. What is Anle's equity cost of capital? a. What is Anle's expected dividend yield? Anle's expected dividend yield is%. (Round to two decimal places.) b. What is Anle's expected capital gain rate? Anle's expected capital gain rate is %. (Round to two decimal places.) c. What is Anle's equity cost of capital? Anle's equity cost of capital is%. (Round to two decimal places.)A company with a share price of £5.50 and 500,000 shares plans to undertake an investment project which will change expectations about the future growth of dividends. As a result of the project next year’s dividends are expected to be 25p and they are then expected to grow at 7% per annum. The firm’s required rate of return is 11%. Assume that the share price is determined using the dividend valuation model and that prices adjust as soon as an investment decision is made. For the situation where the company decides to go ahead with the project. What is (i) the new share price and (ii) the net present value of the project? (i) £6.25 and (ii) £250,000 (i) £6.25 and (ii) £375,000 (i) £6.00 and (ii) £250,000 (i) £6.00 and (ii) £375,000 None of the aboveA company with a share price of £5.50 and 500,000 shares plans to undertake an investment project which will change expectations about the future growth of dividends. As a result of the project next year’s dividends are expected to be 25p and they are then expected to grow at 7% per annum. The firm’s required rate of return is 11%. Assume that the share price is determined using the dividend valuation model and that prices adjust as soon as an investment decision is made. For the situation where the company decides to go ahead with the project. What is (i) the new share price and (ii) the net present value of the project?
- Anle's Corporation has a current price of $12, is expected to pay a dividend of $1 in one year, and its expected price right after paying that dividend is $16. What is Anle's expected dividend yield? What is Anle's expected capital gain rate? What is Anle's equity cost of capital? a. What is Anle's expected dividend yield? Anle's expected dividend yield is b. What is Anle's expected capital gain rate? Anle's expected capital gain rate is c. What is Anle's equity cost of capital? Anle's equity cost of capital is %. (Round to two decimal places.) %. (Round to two decimal places.) %. (Round to two decimal places.)Suppose Acap Corporation will pay a dividend of $2.83 per share at the end of this year and $3.07 per share next year. You expect Acap's stock price to be $52.34 in two years. Assume that Acap's equity cost of capital is 10.7%. a. What price would you be willing to pay for a share of Acap stock today if you planned to hold the stock for two years? b. Suppose, instead, you plan to hold the stock for one year. For what price would you expect to be able to sell a share of Acap stock in one year? c. Given your answer in part b, what price would you be willing to pay for a share of Acap stock today if you planned to hold the stock for one year? How does this price compare to your answer in part a? a. If you planned to hold the stock for two years, the price you would pay for a share of Acap stock today is $ (Round to the nearest cent.)Assume that Cola Co. has a share price of $42.88. The firm will pay a dividend of $1.14 in one year, and you expect Cola Co. to raise this dividend by approximately 6.6% per year in perpetuity. a. If Cola Co.'s equity cost of capital is 8.4%, what share price would you expect based on your estimate of the dividend growth rate? b. Given Cola Co.'s share price, what would you conclude about your assessment of Cola Co.'s future dividend growth?