Sd House of Haddock has 5,030 shares outstanding and the stock price is $143. The company is expected to pay a dividend of $23 pershare next year and thereafter the dividend is expected to grow indefinitely by 4% a year. The president, George Mullet, now makes asurprise announcement: He says that the company will henceforth distribute half the cash in the form of dividends and the remainderwill be used to repurchase stock. The repurchased stock will not be entitled to the dividend.a-1. What is the total value of the company before the announcement?a-2. What is the total value of the company after the announcement?a-3. What is the value of one share?b. What is the expected stream of dividends per share for an investor who plans to retain his shares rather than sell them back to thecompany? Check your estimate of share value by discounting this stream of dividends per share.Complete this question by entering your answers in the tabs below.Req A1 to A3Answer is not complete.Reg BWhat is the expected stream of dividends per share for an investor who plans to retain his shares rather than sell them backto the company? Check your estimate of share value by discounting this stream of dividends per share.Note: Do not round intermediate calculations. Round your answers to 2 decimal places.

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House of Haddock has 5,030 shares outstanding and the stock price is $143. The company is expected to pay a dividend of $23 per share next year and thereafter the dividend is expected to grow indefinitely by 4% a year. The president, George Mullet, now makes a surprise announcement: He says that the company will henceforth distribute half the cash in the form of dividends and the remainder will be used to repurchase stock. The repurchased stock will not be entitled to the dividend. a-1. What is the total value of the company before the announcement? a-2. What is the total value of the company after the announcement? a-3. What is the value of one share? h. What is the expected stream of

House of Haddock has 5,030 shares outstanding and the stock price is $143. The company is expected to pay a dividend of $23 per share next year and thereafter the dividend is expected to grow indefinitely by 4% a year. The president, George Mullet, now makes a surprise announcement: He says that the company will henceforth distribute half the cash in the form of dividends and the remainder will be used to repurchase stock. The repurchased stock will not be entitled to the dividend. a-1. What is the total value of the company before the announcement? a-2. What is the total value of the company after the announcement? a-3. What is the value of one share? h. What is the expected stream of

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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House of Haddock has 5,050 shares outstanding and the stock price is $145. The company is expected to pay a dividend of $25 per share next year and thereafter the dividend is expected to grow indefinitely by 2% a year. The President, George Mullet, now makes a surprise announcement: He says that the company will henceforth distribute half the cash in the form of dividends and the remainder will be used to repurchase stock. The repurchased stock will not be entitled to the dividend. What is the expected stream of dividends per share for an investor who plans to retain his shares rather than sell them back to the company? Check your estimate of share value by discounting this stream of dividends per share. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Year Expected Dividend 1 $ 2 $
House of Haddock has 5,000 shares outstanding and the stock price is $140. The company is expected to pay a dividend of $20 per share next year and thereafter the dividend is expected to grow indefinitely by 5% a year. The president, George Mullet, now makes a surprise announcement: He says that the company will henceforth distribute half the cash in the form of dividends and the remainder will be used to repurchase stock. The repurchased stock will not be entitled to the dividend. a-1. What is the total value of the company before the announcement? a-2. What is the total value of the company after the announcement? a-3. What is the value of one share? b. What is the expected stream of dividends per share for an investor who plans to retain his shares rather than sell them back to the company? Check your estimate of share value by discounting this stream of dividends per share. Complete this question by entering your answers in the tabs below. Req A1 to A3 Year What is the expected…
Payout Policy. House of Haddock has 5,000 shares outstanding and the stock price is $100. The company is expected to pay a dividend of $20 per share next year, and thereafter, the dividend is expected to grow indefinitely by 5% a year. The president, George Mullet, now makes a surprise announcement: He says that the company will henceforth distribute half the cash in the form of dividends and the remainder will be used to repurchase stock. a. what should be the total value of the company before the announcement? b. what should be the total value after the announcement? c. what must be the expected rate of return on equity? d. what is the new growth rate in the dividend stream? (check your estimate of share value by discounting this stream of dividends per share)
Storm plc has 5,000 shares outstanding and the stock price is £140. The company is expected to pay a dividend of £20 per share next year and thereafter the dividend is expected to grow indefinitely by 5% a year. The president, Jack Mora, now makes a surprise announcement: He says that the company will henceforth distribute half the cash in the form of dividends and the remainder will be used to repurchase stock. The repurchased stock will not be entitled to the dividend. a) Discuss how the announcement affect the value of the company. b) Advise the shareholders should they choose the cash dividends, or the stock repurchase.
Xijiang issued 1000 shares at the beginning of fiscal year (t=0), and the net profit at the end of fiscal year (t=1) is expected to be 2million won. (zhuxijiang plans to pay a total of 800000 won as dividends to shareholders at the end of the accounting year, and the rest will be retained for internal reinvestment. (Zhou) the average self capital profit margin (roe= current net profit of the accounting year / self capital at the beginning of the accounting year) of Xijiang in each accounting year will be maintained at 20%. (shares) Xijiang's dividend policy and self capital profit margin will continue to be maintained. The annual required rate of return (RRR) of the enterprise in the market is 16%. If the dividend growth rate (or profit growth rate) of the company is equal to the return on self capital (ROE) multiplied by the internal retention rate, please answer the following questions. The dividend discount model is used to calculate the stock price at the beginning of the…
Consolidated Pasta is currently expected to pay annual dividends of $10 a share in perpetuity on the 2.7 million shares that are outstanding. Shareholders required a 10 % rate of return on consolidated stock. A. What is the price of Consolidated stock? B. What is the total market value of its equity? Consolidated now decides to increase next year’s dividends to $20 a share, without changing its investment or borrowing plans. Thereafter, the company will revert to its policy of distributing $10 per year. C. How much new equity capital will the company need to raise to finance the extra dividend payment (enter answer in millions). D. What will be the total present value of dividends paid each year on the new shares that the company will need to issue (answer in millions)? E. what will be the transfer of value from old shareholder to new shareholder (answer in million)?
KBS enterprise is selling one of its division for $80million cash.At the upcoming quarterly board meeting, KBS board of directors are to decide whether to use the entire funds for a cash dividend or carry out a repurchase of 2million shares valued at $80million.both options will have some possible effects on the company. The company has a long term record of gradually increasing dividend.As the head of treasury, providing an in depth discussion of at least three factors that the board of directors would need to keep in perspective when making their final decision
David Davis is interested in purchasing the common stock of Pharoah, Inc., which is currently priced at $40.69. The company is expected to pay a dividend of $2.58 next year and to increase its dividend at a constant rate of 7.50 percent.
Your company follows the policy to pay all the free cashflow to equityholders via dividend. The free cashflow next year will be 6,000,000 USD and there are 2,000,000 shares outstanding. The dividend is expected to increase at a 5% rate. The company thinks to issue new equity for 4,000,000 USD at the end of the year to increase the amount paid out as dividend (note: the new shareholders will also receive the dividend). The levered return on equity is 16%. a) What will be the dividend paid next year?b) What will be the ex-dividend price next year?
XYZ Electronics Inc. is all equity financed and generates perpetual annual EBIT of $600. Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year. Assume that XYZ has a 100% payout rate, 5,000 shares outstanding, and that shareholders require a return of 5%. Assume that the tax rate is 0%. XYZ is considering an open market stock repurchase. It plans to buy 20% of its outstanding shares at the price of $4.00 per share. The repurchased shares will be cancelled. It will finance the repurchase by issuing perpetual bonds with a coupon rate (and yield) of 3%. Assume that the tax rate is 0%. If XYZ goes ahead with the repurchase, then what is the value of the company after the repurchase is complete?
Orbital Logistics, Inc., will pay a dividend in one year to common shareholders of $2.75 per share, then pay a dividend of $3.00 per share at the end of year two, then pay a dividend of $2.50 at the end of year three, and a dividend of $3.10 per share at the end of year four, after which the company plans to increase the dividend by 2.5% per year thereafter. The company's weighted average cost of capital is 10.35%. Rounded to the nearest cent, the horizon value of Orbital Logistics common stock is $ Rounded to the nearest cent, the current intrinsic price per share of Orbital Logistics common stock is
Premier, Incorporated, has an odd dividend policy. The company has just paid a dividend of $11.25 per share and has announced that it will increase the dividend by $9.25 per share for each of the next four years, and then never pay another dividend. If you require a return of 13 percent on the company’s stock, how much will you pay for a share today? McCabe Corporation is expected to pay the following dividends over the next four years: $5.40, $16.40, $21.40, and $3.20. Afterward, the company pledges to maintain a constant 6 percent growth rate in dividends forever. If the required return on the stock is 9 percent, what is the current share price? Synovec Corporation is growing quickly. Dividends are expected to grow at a rate of 32 percent for the next three years, with the growth rate falling off to a constant 6.2 percent, thereafter. If the required return is 14 percent and the company just paid a dividend of $2.85, what is the current share price? The Dahlia Flower…

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