Using the equity stake equation, if a business owner needed to raise $250,000 in equity and the company is worth $1,000,000, how much (what percentage) of the company would the owners have to give up if the growth rate is 15% and they expect to completely sell out in 5 yea
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Using the equity stake equation, if a business owner needed to raise $250,000 in equity and the company is worth $1,000,000, how much (what percentage) of the company would the owners have to give up if the growth rate is 15% and they expect to completely sell out in 5 years?
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- Please use Excel to solve: You have just purchased a share of stock for $20. The company is expected to pay a dividend of $0.50 per share in exactly one year. If you want to earn a 10% return on your investment, what price do you need if you expect to sell the share immediately after it pays the dividend?Using the equity stake equation, if a business owner neeeded to raise $250,000 in equity and the company is worth $1,000,000, how much (what percentage) of the company would the owners have to give up if the growth rate is 15% and they expect to completely sell out in 5 years?Dietterich Electronics wants its shareholders to earn a return of 15% on their investment in the company. At what price would the stock need to be priced today if Dietterich Electronics had a a. $0.20 constant annual dividend forever? b. $0.90 constant annual dividend forever? c. $1.80 constant annual dividend forever? d. $2.80 constant annual dividend forever?
- The Clipper Sailboat Company is expected to earn $5 per share next year. The company will have a return on equity of 16 percent and the company will grow 4 percent in the future. The company has a cost of equity of 13 percent. Given that information, answer the following questions. a. What is the value of the company's stock? Do not round intermediate calculations. Round your answer to the nearest cent. $ b. What is the present value of the growth opportunity? Do not round intermediate calculations. Round your answer to the nearest cent. $ c. Assume that the growth rate is only 3 percent. What would the appropriate P/E multiple be for this stock? Do not round intermediate calculations. Round your answer to two decimal places. xNeuroDyne Corporation (NDC) currently has a 100% dividend payout ratio, pays a dividend of $5 per year, and has a Re of 8%. Using the Dividend Discount Model (DDM), what is the price of NDC stock? If NDC reduces its payout ratio to 75% and starts investing in new projects with IRRs of 10%, what will the new stock price be?Car Rental Service's stock price is expected to be $85 in one year immediately after paying a dividend of $3.87. If its equity cost of capital is 12%, what is the expected capital gain in dollars if you sell the stock one year from today immediately after receiving the dividend?
- A company’s common stock is currently selling at $40 per share. Its most recent dividend was $1.60, and the financial community expects that its dividend will grow at 10% per year in the foreseeable future. What is the company’s equity cost of retained earnings? If the company sells new common stock to finance new projects and most pay $2 per share in flotation costs, what is the cost of equity? Be sure to include your work for all calculations.NoGrowth Corporation currently pays a dividend of $2 per year, and it will continue to pay this dividend forever. What is the price per share if its equity cost of capital is 15% per year?Boston Company has just paid dividends of $2.5 per share, which the company projects will grow at a constant rate of 5 percent forever. If Boston Company’s shareholders require 15 percent rate of return, what is the price of its common stock? Can you show the excel formula?
- Assume that you are in a perfect Modigliani-Miller world (no taxes, no bankruptcy costs, etc.). A firm has pledged to pay a $10 dividend per share every year, forever. Its cost of equity is 10 percent. You are considering whether to buy the share today at the current market price, receive the next dividend (which is due tomorrow), and sell the share in exactly a year from today. What do you expect your return on this strategy to (approximately) be? Group of answer choices 9 percent 11 percent 10 percent 20 percent 5 percentDietterich Electronics wants its shareholders to earn a return of 8% on their investment in the company. At what price would the stock need to be priced today if Dietterich Electronics had a a. $0.20 constant annual dividend forever? b. $1.10 constant annual dividend forever? c. $1.90 constant annual dividend forever? d. $2.70 constant annual dividend forever?Help me please