also give stock price Suppose Compco Systems pays no dividends but spent $5.18 billion on share...
Suppose Compco Systems pays no dividends but spent $4.92 billion on share repurchases last year. If Compco's equity cost of capital is 12.8%, and if the amount spent on repurchases is expected to grow by 8.4% per year, estimate Compco's market capitalization. If Compco has 6.6 billion shares outstanding, to what stock price does this correspond?Compco's market capitalization will be? billion. (Round to two decimal places.) Please show steps to reach final answer.
Yesterday, Cyberdyne Systems paid out $1.25 billion in dividends and repurchased $2.995 billion worth of shares. Assume that all payouts occur at the end of the year. Next year's payouts (due in one year) are expected to be 3.5% bigger than last year's and are expected to grow at that same rate in perpetuity. Cyberdyne Systems has 0.95 billion shares outstanding and its shareholders require a 9% rate of return. What is the fair price for Cyberdynes's shares today? The...
Surf & Turf Hotels is a mature business, although it pays no cash dividends. Next year's earnings are forecasted at $82 million. There are 10 million outstanding shares. The company has traditionally paid out 50% of earnings by repurchases and reinvested the remaining earnings. With reinvestment, the company has generated steady growth averaging 5% per year. Assume the cost of equity is 10%. a. Calculate Surf & Turf 's current stock price, using the constant-growth DCF model. (Hint. Take the...
Surf & Turf Hotels is a mature business, although it pays no cash dividends. Next year’s earnings are forecasted at $88 million. There are 10 million outstanding shares. The company has traditionally paid out 50% of earnings by repurchases and reinvested the remaining earnings. With reinvestment, the company has generated steady growth averaging 5% per year. Assume the cost of equity is 14%. a. Calculate Surf & Turf ’s current stock price, using the constant-growth DCF model. (Hint: Take the...
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Growth Company's current share price is $20.00 and it is expected to pay a $1.30 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 4.1% per year. a. What is an estimate of Growth Company's cost of equity? b. Growth Company also has preferred stock outstanding that pays a $1.85 per share fixed dividend. If this stock is currently priced at $28.20, what is Growth Company's cost of preferred...
#1 Van Buren, Inc., currently pays $2.24 per share in dividends on its common stock. Dividends are expected to grow at 7.00 % per year forever. If you require a 13.00 % rate of return (i.e., the discount rate) on this investment, what value would you place on a share of Van Buren common stock? Assume that the current dividend was just paid. Answer format: Currency: Round to 2 decimal places # 2 Bad Investment Incorporated has "promised" investors to...
Question 1 –Share Repurchases in Perfect Capital MarketsABCCompany hasno debt anda market capitalization of $1.5 billion and 35million shares outstanding. It plans to distribute $65 million to its shareholders through an open market repurchase. Assume that markets are efficient and that there are no frictions(i.e. no taxes, no transaction costs, etc.).A)What will the price per share of ABCbe right before the repurchase?(Round to two decimals)B)How many shares will be repurchased?C)What will the price pershare of ABC be right after the...
Growth Company's current share price is $19.90 and it is expected to pay a $1.05 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 4.3% per year. a. What is an estimate of Growth Company's cost of equity? b. Growth Company also has preferred stock outstanding that pays a $2.05 per share fixed dividend. If this stock is currently priced at $28.00, what is Growth Company's cost of preferred stock? c....
UILIELS. Dividends and Share Repurchases 8. Stock dividends and stock splits Aa Aa El Companies sometimes consider stock splits to bring down the price so that the stock attracts more purchases. Consider the following case: sertificate of Sto Happy Monkey Manufacturing currently has 10,000 shares of common stock outstanding. Its management believes that its current stock price of $100 per share is too high. The company is planning to conduct stock splits in the ratio of 3 for 1 as...
Dynamic Energy Systems stock is currently trading for $29 per share. The stock pays no dividends. A one-year European put option on Dynamic with a strike price of $32 is currently trading for $3.69. If the risk-free interest rate is 3% per year, what is the price of a one-year European call option on Dynamic with a strike price of $32? (Rounded to the nearest cent.)