Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Elden Bling, an aged jewellery distributor, issues dividends semi-annually. The most recent divided was $0.90, dividends are expected to grow at 9% per year compounded semi-annually and the
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- Sparkling Water, Inc., expects to sell 3.7 million bottles of drinking water each year in perpetuity. This year each bottle will sell for $1.46 in real terms and will cost $.82 in real terms. Sales income and costs occur at year-end. Revenues will rise at a real rate of 1.3 percent annually, while real costs will rise at a real rate of 1.2 percent annually. The real discount rate is 8 percent. The corporate tax rate is 25 percent. What is the company worth today?arrow_forwardThe Garden Shoppe has adopted a policy of increasing its annual dividend at a constant rate of 2.89 percent annually. The company just paid its annual dividend of $1.71. What will the dividend be nine years from now?arrow_forwardMost corporations pay quarterly dividends on their common stock rather than annual dividends. Barring any unusual circumstances during the year, the board raises, lowers, or maintains the current dividend once a year and then pays this dividend out in equal quarterly installments to its shareholders. a. Suppose a company currently pays an annual dividend of $410 on its common stock in a single annual installment, and management plans on raising this dividend by 4 percent per year indefinitely. If the required return on this stock is 14 percent, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. Now suppose the company in (a) actually pays its annual dividend in equal quarterly installments; thus, the company has just paid a dividend of $1.025 per share, as it has for the previous three quarters. What is your value for the current share price now? (Hint Find the equivalent annual end-of-year dividend for…arrow_forward
- Braxton Enterprises currently has debt outstanding of $45 million and an interest rate of 10%. Braxton plans to reduce its debt by repaying $9 million in principal at the end of each year for the next five years.If Braxton's marginal corporate tax rate is 21%, what is the interest tax shield from Braxton's debt in each of the next five years? (Round to three decimal places.)arrow_forwardMetal Inc. has not issued a dividend. It is management's intention to do so beginning three years from today. The initial annual dividend is expected to be $3.00. Over the subsequent three years the annual dividends are expected to grow by 15% per year and then 10% per year for 4 years before slowing to a permanent growth rate of 3.5% per year. Determine the dollar value of the 2nd dividend.arrow_forwardIndustrial Industries paid an annual dividend of $1.55 per share last month. Today, the company announced that future dividends will be increasing by 3.40 percent annually. If you require a 8.7 percent rate of return, how much are you willing to pay to purchase one share of this stock today?arrow_forward
- Over the next three years, Distant Groves will pay annual dividends of $1.65, $.172, and $1.80 a share, respectively. After that, dividends are projected to increase by 2.5 percent per year. What is one share of this stock worth today at a required return of 14.7 percent? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)arrow_forwardCEPS Group is going to pay an annual dividend of OMR 1.98 a share on its common stock next year. This year, the company paid a dividend of OMR 1.85 a share. The company adheres to a constant rate of growth dividend policy. What will one share of this common stock be worth five years from now if the applicable discount rate is 11.5 percent?arrow_forward
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