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Dividend Policy. How is it possible that dividends are so important, but at the same time, dividend policy is irrelevant? If increases in dividends tend to be followed by (immediate) increases in share prices, how can it be said that dividend policy is irrelevant?
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- Assume that you are a consultant to Broske Inc., and you have been provided with the following data: the next expected dividend is $0.67; the current market price is $42.50 and the constant growth rate for the dividends is 8.00% Based on the information given what is the cost of equity?Blue is currently selling for $26 per share. Its next dividend (in one year) is forecasted to be $1. Immediately after the dividend is paid, you expect the price to be $33. a. What is its expected dividend yield? b. What is its expected capital gain rate? c. What is the equity investors' expected return? Question content area bottom Part 1 a. Dividend yield: enter your response here%. (Round to two decimal places.) b. Capital gain rate: enter your response here%. (Round to two decimal places.) c. Expected Return: enter your response here%. (Round to two decimal places.)Suppose instead that the company is about to pay a dividend of $2.00 per share. You also learn that the company is expected to have net income of $100 million, dividends of $50 million, and total equity of $1.5 billion (and that these relationships are expected to be stable). If the relevant required rate of return is 10%, what is the intrinsic value per share of the company’s stock?
- ABC Inc. has the following data. If it follows the residual dividend model, what is its forecasted dividend payout ratio? Capital budget % Debt Net income (NI) Select one: a. 49.20% b. 37.20% c. 31.60% d. 39.60% e. 40.00% $7,000 40% $7,000A stock is selling today for $40 per share. At the end of the year, it pays a dividend of $2 per share and sells for $44. Required: a. What is the total rate of return on the stock? b. What are the dividend yield and percentage capital gain? c. Now suppose the year-end stock price after the dividend is paid is $36. What are the dividend yield and percentage capital gain in this case? Complete this question by entering your answers in the tabs below. Required A Required B Required C Now suppose the year-end stock price after the dividend is paid is $36. What are the dividend yield and percentage capital gain in this case? (Negative amounts should be indicated by a minus sign. Enter your answers as a whole percent.) Dividend yield Capital gains yieldA stock is selling today for $60 per share. At the end of the year, it pays a dividend of $3 per share and sells for $66. Required: a. What is the total rate of return on the stock? b. What are the dividend yield and percentage capital gain? c. Now suppose the year-end stock price after the dividend is paid is $51. What are the dividend yield and percentage capital gain in this case?
- Consider the following for a firm. Its stock price (P0) is at $50, its payout ratio (POR) is 0.4, its EPS1 is $2.00, and investor required return is 10%.. What is the percent of capital gains?DONOT SOLVE ON EXCEL USE PROPER FORMATEYou are evaluating the stock of XYZ Corp. Suppose that the required rate of return for the firm is 20%. Suppose future dividends are expected to grow at 10% per year. The current stock price of the firm is $55. What is the expected dividend per share next year (D1)? a. $4.5 b. $4.0 c. $5.0 d. $5.5Assume IBM is expected to pay a total cash dividend of $3.90 next year and dividends are expected to grow indefinitely by 3.0 percent a year. Assume the required rate of return (i.e. equity holder's opportunity cost of capital) is 9.3 percent. Assuming this is the best information available regarding the future of this firm, what would be the most economically rational value of the stock today (i.e. today's "price")? Answer to 2 decimal places.
- Assume now that CAPM holds. You need to estimate the price of one stock of company XYZ. You expect that this company’s earnings per share will be $4 in one year, your estimation of Present Value of Growth Opportunities today is $40. The company has just paid out the dividend for the previous financial year. Expected return of market portfolio is equal to 20%, its standard deviation is equal to 55% and covariance between the returns on XYZ and market portfolio is 0.5. The risk-free rate is 5%. Find the price of a stock.What is the rate of return on a stock that currently sells for GH₵ 36 and is expected to sell for GH₵ 40 a year from now? Dividends in the coming year are pegged at GH₵ 4 per share. What are the dividend yield and capital gain component of the return?Anle Corporation has a current stock price of $15.42 and is expected to pay a dividend of $0.85 in one year. Its expected stock price right after paying that dividend is $17.47. a. What is Anle's equity cost of capital? b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain? GELEID a. What is Anle's equity cost of capital? Anle's equity cost of capital is% (Round to two decimal places)