XYZ Corp. has $34 million dollars that it wishes to pay out as dividends, and a...
XYZ Corp. has $34 million dollars that it wishes to pay out as dividends, and a cost of equity of 0.22. If it pays out $12 million in dividends today, what dividend should they pay 1 year from today to make shareholders indifferent between this dividend scheme and one where shareholders get all of the cash today?
Homework Answers
Dividend to be paid one year from today=(Cash today-Dividend today)*(1+cost of equity)=(34-12)*(1+0.22)=26.84000 million
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