Please thank you Sooner-than-Later (STL) Inc. announces that it will pay a $75 per dividend nextyear, followed by a final dividend of $30 per share in the year after. Mrs.Donna Holder has 50 shares in STL Inc. She wishes to limit her income frominvestments to no more than $35 per share in the first year. Demonstrate through relevantcomputations, how she can achieve this goal through homemade dividends if therequired return on STL Inc’s shares is 9%. What will be Mrs. Holder’s earningin the second year? Show detailed workings

Sooner-than-Later (STL) Inc. announces that it will pay a $75 per dividend next year, followed by a final dividend of $30 per share in the year after. Mrs. Donna Holder has 50 shares in STL Inc. She wishes to limit her income from investments limited to $35 in the first year. Demonstrate through relevant computations, how she can achieve this goal through homemade dividends if the required return on STL Inc’s shares is 9%. What will be Mrs. Holder’s earning in the second year?

Joy wants to invest his funds in shares in one of the two existing manufacturing companies. The following information about the dividend paid during the seven years of the Year Brown Company Avel Company 2000 500 300 2001 600 557 2002 665 615 2003 675 640 2004 785 790 2005 800 815 2006 815 795 If you as an investment consultant who is conducting an analysis of the two companies, with Using trend analysis, which company would you recommend to Joy for his investment in 2010? (work with complete procedure)

2. An analyst for Acme, R. Runner, has recommended that Peter the Anteater purchase shares in a private firm (a firm that is not traded on any exchange) called Dynamite Corp. Dynamite has 30% debt and 70% equity. R. Runner believes that Dynamite will generate a return of 10% over the next year. Since Y. Lee is new to the job, he decides to do a little research on his own. He finds a company, Explosions Unlimited, that has very similar business as Dynamite. Explosions has an equity beta of 1.05 and is composed of 40% debt and 60% equity. Should Peter the Anteater buy the stock? The expected return on the market is 12% and the expected risk-free rate is 5%.

What price would you be willing to pay to purchase 1 share of this stock? (Picture )

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