Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
4th Edition
ISBN: 9780134083278
Author: Jonathan Berk, Peter DeMarzo
Publisher: PEARSON
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Textbook Question
Chapter 9, Problem 17P
Maynard Steel plans to pay a dividend of $3 this year. The company has an expected earnings growth rate of 4% per year and an equity cost of capital of 10%.
- a. Assuming Maynard's
dividend payout rate and expected growth rate remains constant, and Maynard does not issue or repurchase shares, estimate Maynard’s share price. - b. Suppose Maynard decides to pay a dividend of $1 this year and use the remaining $2 per share to repurchase shares. If Maynard’s total payout rate remains constant, estimate Maynard's share price.
- c. If Maynard maintains the same split between dividends and repurchases, and the same payout rate, as In part (b), at what rate are Maynard’s dividends, earnings per share, and share price expected to grow in the future?
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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 $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 4.4% per year and an equity cost of capital of 10.4%.
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.)
Chapter 9 Solutions
Corporate Finance (4th Edition) (Pearson Series in Finance) - Standalone book
Ch. 9.1 - How do you calculate the total return of a stock?Ch. 9.1 - Prob. 2CCCh. 9.2 - In what three ways can a firm increase its future...Ch. 9.2 - Under what circumstances can a firm increase its...Ch. 9.3 - How does the growth rate used in the total payout...Ch. 9.3 - Prob. 2CCCh. 9.3 - Prob. 3CCCh. 9.4 - Prob. 1CCCh. 9.4 - What implicit assumptions are made when valuing a...Ch. 9.5 - State the efficient market hypothesis.
Ch. 9.5 - Prob. 2CCCh. 9 - Assume Evco, Inc., has a current price of 50 and...Ch. 9 - Anle corporation has a current price of 20, is...Ch. 9 - Suppose Acap Corporation will pay a dividend of...Ch. 9 - Prob. 4PCh. 9 - NoGrowth Corporation currently pays a dividend of...Ch. 9 - Summit Systems will pay a dividend of 1.50 this...Ch. 9 - Prob. 7PCh. 9 - Canadian-based mining company EI Dorado Gold (EGO)...Ch. 9 - In 2006 and 2007, Kenneth Cole Productions (KCP)...Ch. 9 - DFB, Inc., expects earnings at the end of this...Ch. 9 - Cooperton Mining just announced it will cut its...Ch. 9 - Procter and Gamble (PG) paid an annual dividend of...Ch. 9 - Colgate-Palmolive Company has just paid an annual...Ch. 9 - Prob. 14PCh. 9 - Halliford Corporation expects to have earnings...Ch. 9 - Prob. 16PCh. 9 - Maynard Steel plans to pay a dividend of 3 this...Ch. 9 - Prob. 18PCh. 9 - Prob. 19PCh. 9 - Prob. 20PCh. 9 - Prob. 23PCh. 9 - Prob. 24PCh. 9 - Prob. 25PCh. 9 - Suppose that In January 2006, Kenneth Cole...Ch. 9 - In addition to footwear, Kenneth Cole Productions...Ch. 9 - You read in the paper that Summit Systems from...Ch. 9 - Prob. 31PCh. 9 - Prob. 32PCh. 9 - Prob. 33P
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