Optimized Co. has a current period cash flow of $1.1 million and pays no dividends. Thepresent value of the company's future cash flows is $13 million. The company is entirelyfinanced with equity and has 610,000 shares outstanding. Assume the dividend tax rateis zero.a. What is the share price of the company's stock? (Do not round intermediatecalculations and round your answer to 2 decimal places, e.g., 32.16.)Share priceb. Suppose the board of directors of the company announces its plan to pay out50 percent of its current cash flow as cash dividends to its shareholders. Jeff Miller,who owns 1,300 shares of the company's stock, wants to achieve a zero payout policyon his own, by buying or selling shares. How many shares should he sell or buy? (Donot round intermediate calculations and round your answer to 2 decimal places,e.g., 32.16.)Number of shares to#3*4Owerd%5aJ106&78K◄◄

a) Share price: = (current period cash flow + present value of future cash flows)/no of shares =…

d period cash flow of $1.1 million and pays no dividends. The present value of the company's future cash flows is $13 million. The company is entirely financed with equity and has 610,000 shares outstanding. Assume the dividend tax rate is zero. a. What is the share price of the company's stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Share price

d period cash flow of $1.1 million and pays no dividends. The present value of the company's future cash flows is $13 million. The company is entirely financed with equity and has 610,000 shares outstanding. Assume the dividend tax rate is zero. a. What is the share price of the company's stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Share price

Financial Management: Theory & Practice

16th Edition

ISBN:9781337909730

Author:Brigham

Publisher:Brigham

Chapter15: Capital Structure Decisions

Section: Chapter Questions

Problem 11P: The Rivoli Company has no debt outstanding, and its financial position is given by the following...

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