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.

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.

Name: Maynard Steel plans to pay a dividend of $2.89 this year. The company
Uploaded: 2024-03-20T06:51:32.000Z
Channel: Bartleby
Description: 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,

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 15P

See similar textbooks

Similar questions

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 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.
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 $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.
Assume XYZ Corp's dividend payment will be $3.12 one year from now, $3.85 two years from now, and $4.12 three years from now. Further assume that after these three years, the dividend will grow by 4.5% each year. If the required rate of return for the industry XYZ Corp. belongs to is 10.7%, what is the market value of XYZ Corp.'s stock under the Dividend Discount Model? O $71.24 Ⓒ$65.45 O $60.19 O $55.72
DFB, Inc. expects earnings next year of $5.63 per share, and it plans to pay a $4.11 dividend to shareholders (assume that is one year from now). DFB will retain $1.52 per share of its earnings to reinvest in new projects that have an expected return of 14.8% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next dividend is due in one year. a. What growth rate of earnings would you forecast for DFB? b. If DFB's equity cost of capital is 12.5%, what price would you estimate for DFB stock today? c. Suppose instead that DFB paid a dividend of $5.11 per share at the end of this year and retained only $0.52 per share in earnings. That is, it chose to pay a higher dividend instead of reinvesting in as many new projects. If DFB maintains this higher payout rate in the future, what stock price would you estimate for the firm now? Should DFB raise its…
DFB, Inc. expects earnings next year of $5.99 per share, and it plans to pay a $4.36 dividend to shareholders (assume that is one year from now). DFB will retain $1.63 per share of its earnings to reinvest in new projects that have an expected return of 14.8% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next dividend is due in one year. a. What growth rate of earnings would you forecast for DFB? b. If DFB's equity cost of capital is 12.6%, what price would you estimate for DFB stock today? c. Suppose instead that DFB paid a dividend of $5.36 per share at the end of this year and retained only $0.63 per share in earnings. That is, it chose to pay a higher dividend instead of reinvesting in as many new projects. If DFB maintains this higher payout rate in the future, what stock price would you estimate for the firm now? Should DFB raise its…
DFB, Inc. expects earnings next year of $4.48 per share, and it plans to pay a $2.54 dividend to shareholders (assume that is one year from now). DFB will retain $1.94 per share of its earnings to reinvest in new projects that have an expected return of 15.7% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next dividend is due in one year. a. What growth rate of earnings would you forecast for DFB? b. If DFB's equity cost of capital is 11.8%, what price would you estimate for DFB stock today? c. Suppose instead that DFB paid a dividend of $3.54 per share at the end of this year and retained only $0.94 per share in earnings. That is, it chose to pay a higher dividend instead of reinvesti in as many new projects. If DFB maintains this higher payout rate in the future, what stock price would you estimate for the firm now? Should DFB raise its…
DFB, Inc. expects earnings next year of $4.29 per share, and it plans to pay a $2.78 dividend to shareholders (assume that is one year from now). DFB will retain $1.51 per share of its earnings to reinvest in new projects that have an expected return of 14.3% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next dividend is due in one year. a. What growth rate of earnings would you forecast for DFB? b. If DFB's equity cost of capital is 11.7%, what price would you estimate for DFB stock today? c. Suppose instead that DFB paid a dividend of $3.78 per share at the end of this year and retained only $0.51 per share in earnings. That is, it chose to pay a higher dividend instead of reinvesting in as many new projects. If DFB maintains this higher payout rate in the future, what stock price would you estimate for the firm now? Should DFB raise its…
DFB, Inc. expects earnings next year of $4.73 per share, and it plans to pay a $3.09 dividend to shareholders (assume that is one year from now). DFB will retain $1.64 per share of its earnings to reinvest in new projects that have an expected return of 15.4% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next dividend is due in one year. a. What growth rate of earnings would you forecast for DFB? b. If DFB's equity cost of capital is 12.6%, what price would you estimate for DFB stock today? c. Suppose instead that DFB paid a dividend of $4.09 per share at the end of this year and retained only $0.64 per share in earnings. That is, it chose to pay a higher dividend instead of reinvesting in as many new projects. If DFB maintains this higher payout rate in the future, what stock price would you estimate for the firm now? Should DFB raise its…
DFB, Inc. expects earnings next year of $5.00 per share, and it plans to pay a $3.00 dividend to shareholders (assume that is one year from now). DFB will retain $2.00 per share of its earnings to reinvest in new projects that have an expected return of 15.0% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next dividend is due in one year. a. What growth rate of earnings would you forecast for DFB? b. If DFB's equity cost of capital is 12.0%, what price would you estimate for DFB stock today? c. Suppose instead that DFB paid a dividend of $4.00 per share at the end of this year and retained only $1.00 per share in earnings. That is, it chose to pay a higher dividend instead of reinvesting in as many new projects. If DFB maintains this higher payout rate in the future, what stock price would you estimate for the firm now? Should DFB raise its…
DFB, Inc. expects earnings next year of $5.87 per share, and it plans to pay a $3.39 dividend to shareholders (assume that is one year from now). DFB will retain $2.48 per share of its earnings to reinvest in new projects that have an expected return of 15.5% per year. Suppose DFB will maintain the same dividend payout rate, retention rate, and return on new investments in the future and will not change its number of outstanding shares. Assume next dividend is due in one year. a. What growth rate of earnings would you forecast for DFB? b. If DFB's equity cost of capital is 11.9%, what price would you estimate for DFB stock today? c. Suppose instead that DFB paid a dividend of $4.39 per share at the end of this year and retained only $1.48 per share in earnings. That is, it chose to pay a higher dividend instead of reinvesting in as many new projects. If DFB maintains this higher payout rate in the future, what stock price would you estimate for the firm now? Should DFB raise its…
William Brown is interested in purchasing the common stock of Oriole, Inc., which is currently priced at $35.56. The company is expected to pay a dividend of $2.58 next year and to increase its dividend at a constant rate of 6.60 percent. What should the market value be if the required rate of return is 14 percent? - Market value of stock $