Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
Principles of Corporate Finance (Mcgraw-hill/Irwin Series in Finance, Insurance, and Real Estate)
12th Edition
ISBN: 9781259144387
Author: Richard A Brealey, Stewart C Myers, Franklin Allen
Publisher: McGraw-Hill Education
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Chapter 16, Problem 7PS
Summary Introduction

To discuss: The manner in which person M can generate $5,000 for living expenses.

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You bought Eagles, Inc. for $3.67 per share 20 years ago.  You never sold any shares.  Today, it has 100mm shares authorized, 40mm shares issued and 30mm in treasury shares.  The market value of the equity today is $600mm.  It has never paid dividends.   Assume a tax rate of 25%.  What is the CAGR on your investment?    Assuming you never sold any shares, what taxes have you paid? You originally bought 1000 shares and sell them all today, what are your net proceeds after tax?
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Joyce has never invested in shares before. She has come to you, as a prospective finance graduate, for some advice. In your conversations with Joyce, you have determined her Required Rate of Return (RRR) to be 8.75%.   b) Determine the value of a share in CCC Ltd. if in the current year they paid a dividend of $4.25 and this is not expected to change into the foreseeable future.      Show formula, variables, calculation and a concluding statement in your response.
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