Homework Answers
| Return on equity = 1350/6750 = | 20.00% | |
| Growth = ROE*Retention | ||
| 0.12 = 0.20*Retention | ||
| Retention = 0.12/0.20 = 60% | ||
| Dividend payout = 1-Retention ratio = 1-60% = | 40.00% | |
| Dividends = 1350*40% = | $ 540.00 | |
| Dividend per share = 540/135 = | $ 4.00 | |
| Cost of equity = 4*1.12/80+0.12 = | 17.60% | |
| 16) | Dividend payout = 40.00% [Option B] | |
| 17) | PV = 4*1.12/1.176 =$3.81 [Option D] |
Add Answer to:
Questions 16 & 17
Assume a Company X's stock price today and cost of equity is...
Assume a Company X's stock price today and cost of equity is consistent with the dividend...
Assume a Company X's stock price today and cost of equity is consistent with the dividend discount model for constant growth; HINT: Cost of Equity Dividend Yield + Capital Gain Yield. Use the information in the table below to answer problems 16-17. Any missing information will need to be solved for. TIME (Years) 0 NI 1,350.00 Dividends Shares Outstanding Book Value Price Per Share Return On Equity Cost of Equity Long Term Growth Dividends Per Share 135.00 $6,750.00 80.00 12.0%...
Assume a Company X's stock price today and cost of equity is consistent with the dividend...
Assume a Company X's stock price today and cost of equity is consistent with the dividend discount model for constant growth HINT: Cost of Equity Dividend Yield + Capital Gain Yield. Use the information in the table below to answer problems 16-17. Any missing information will need to be solved for TIME (Years) 0 Shares Outstanding Book Value Prike Per Share Return On Equity Cost of Equity Long Term Growth Dividends Per Share 135.00 $6,750.00 80.00 12.0% 16. Company X's...
mportant lesson from corporate finance is that the cost of capital depends primarily on the use...
mportant lesson from corporate finance is that the cost of capital depends primarily on the use of the funds, not the source. Put differently, required return, appropriate mean essentially the same thing. Evaluate the underlined words in italics. True or False? discount rate and the A. True B. False 5. A company has positive net income and no debt. If the effective tax rate of the company were to instantaneously change from 30% to 20%, which of the following staterm...
Company ABC has 10,000 shares outstanding and the stock price is $100. The company is expected...
Company ABC has 10,000 shares outstanding and the stock price is $100. The company is expected to pay a dividend of $10 per share next year and thereafter the dividend is expected to grow indefinitely by 6% a year. The company now makes an announcement: It will repurchase shares next year instead of issuing cash dividends. But from year 2 on the payout policy stays the same with cash dividends. (Please check my work A - C, and solve for...
. At the end of 2017, Company X's P/B multiple was closest to: 7.8 8.0 8.3...
. At the end of 2017, Company X's P/B multiple was closest to: 7.8 8.0 8.3 9.3 10.0 5. At the end of 2017, Company X's reported marketable securities closest to: $90 $50 $40 $30 $20 16. At the end of 2017, Company X reported EBITDA closest to: $430 $420 $360 $320 e. $310 17.At the end of 2017, Company X's effective tax was closest to: a. 20% b. 23% c. 25% d. 27% e, 33% 18. Do not include...
COST OF COMMON EQUITY WITH FLOTATION Banyan Co.'s common stock currently sells for $54.00 per share....
COST OF COMMON EQUITY WITH FLOTATION Banyan Co.'s common stock currently sells for $54.00 per share. The growth rate is a constant 7.8%, and the company has an expected dividend yield of 2%. The expected long-run dividend payout ratio is 35%, and the expected return on equity (ROE) is 12%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. What would be the cost of new equity? Round...
9. Problem 10.13 (Cost of Common Equity with Flotation) еВook Banyan Co.'s common stock currently sells...
9. Problem 10.13 (Cost of Common Equity with Flotation) еВook Banyan Co.'s common stock currently sells for $39.75 per share. The growth rate is a constant 5%, and the company has an expected dividend yield of 3%. The expected long-run dividend payout ratio is 40%, and the expected return on equity (ROE) is 8%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. What would be the cost...
Question 16 1 pts The Phelps Company's common stock is currently trading for $25.50 per share....
Question 16 1 pts The Phelps Company's common stock is currently trading for $25.50 per share. The stock is expected to pay a $2.80 dividend at the end of the year and the Phelps Company's equity cost of capital is 10%. If the dividend payout rate is expected to remain constant, then the expected growth rate in the Phelps Company's earnings is closest to - - 0 -1.96% 0 -1.47% 0 -0.98% 0 -0.49%
Dorpac Corporation has a dividend yield of 1.5%. Its equity cost of capital is 8.0%, and...
Dorpac Corporation has a dividend yield of 1.5%. Its equity cost of capital is 8.0%, and its dividends are expected to grow at a constant rate a. What is the expected growth rate of Dorpac's dividends? b. What is the expected growth rate of Dorpac's share price? a. What is the expected growth rate of Dorpac's dividends? The growth rate will be __%. (Round to one decimal place.) b. What is the expected growth rate of Dorpac's share price? What...
Rampart Corporation has a dividend yield of 1.6 %. Its equity cost of capital is 7.5...
Rampart Corporation has a dividend yield of 1.6 %. Its equity cost of capital is 7.5 %, and its dividends are expected to grow at a constant rate. a. What is the expected growth rate of Rampart's dividends? b. What is the expected growth rate of Rampart's share price?
Assume a Company X's stock price today and cost of equity is consistent with the dividend discount model for constant growth; HINT: Cost of Equity Dividend Yield + Capital Gain Yield. Use the information in the table below to answer problems 16-17. Any missing information will need to be solved for. TIME (Years) 0 NI 1,350.00 Dividends Shares Outstanding Book Value Price Per Share Return On Equity Cost of Equity Long Term Growth Dividends Per Share 135.00 $6,750.00 80.00 12.0%...
Assume a Company X's stock price today and cost of equity is consistent with the dividend discount model for constant growth HINT: Cost of Equity Dividend Yield + Capital Gain Yield. Use the information in the table below to answer problems 16-17. Any missing information will need to be solved for TIME (Years) 0 Shares Outstanding Book Value Prike Per Share Return On Equity Cost of Equity Long Term Growth Dividends Per Share 135.00 $6,750.00 80.00 12.0% 16. Company X's...
mportant lesson from corporate finance is that the cost of capital depends primarily on the use of the funds, not the source. Put differently, required return, appropriate mean essentially the same thing. Evaluate the underlined words in italics. True or False? discount rate and the A. True B. False 5. A company has positive net income and no debt. If the effective tax rate of the company were to instantaneously change from 30% to 20%, which of the following staterm...
. At the end of 2017, Company X's P/B multiple was closest to: 7.8 8.0 8.3 9.3 10.0 5. At the end of 2017, Company X's reported marketable securities closest to: $90 $50 $40 $30 $20 16. At the end of 2017, Company X reported EBITDA closest to: $430 $420 $360 $320 e. $310 17.At the end of 2017, Company X's effective tax was closest to: a. 20% b. 23% c. 25% d. 27% e, 33% 18. Do not include...
COST OF COMMON EQUITY WITH FLOTATION Banyan Co.'s common stock currently sells for $54.00 per share. The growth rate is a constant 7.8%, and the company has an expected dividend yield of 2%. The expected long-run dividend payout ratio is 35%, and the expected return on equity (ROE) is 12%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. What would be the cost of new equity? Round...
9. Problem 10.13 (Cost of Common Equity with Flotation) еВook Banyan Co.'s common stock currently sells for $39.75 per share. The growth rate is a constant 5%, and the company has an expected dividend yield of 3%. The expected long-run dividend payout ratio is 40%, and the expected return on equity (ROE) is 8%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. What would be the cost...
Question 16 1 pts The Phelps Company's common stock is currently trading for $25.50 per share. The stock is expected to pay a $2.80 dividend at the end of the year and the Phelps Company's equity cost of capital is 10%. If the dividend payout rate is expected to remain constant, then the expected growth rate in the Phelps Company's earnings is closest to - - 0 -1.96% 0 -1.47% 0 -0.98% 0 -0.49%
Dorpac Corporation has a dividend yield of 1.5%. Its equity cost of capital is 8.0%, and its dividends are expected to grow at a constant rate a. What is the expected growth rate of Dorpac's dividends? b. What is the expected growth rate of Dorpac's share price? a. What is the expected growth rate of Dorpac's dividends? The growth rate will be __%. (Round to one decimal place.) b. What is the expected growth rate of Dorpac's share price? What...
Most questions answered within 3 hours.
-
The price of 1 lb of potatoes is $1.75. If all the potatoes sold
today at...
asked 20 minutes ago -
Garcia Company issues 20.00%, 15-year bonds with a par value of
$470,000 and semiannual interest payments....
asked 18 minutes ago -
In C++ Programming, Try using loops only.
This lab demonstrates the use of the While Loop...
asked 1 hour ago -
Effect of DCMU and sodium azide on Chlamydomonas? We did an
experiment where we had Chlamydomonas...
asked 1 hour ago -
1a) According to the ideal gas law, _______________.
a. a gas has infinite volume at absolute...
asked 3 hours ago -
Oakdale Fashions, Inc. had $245,000 in 2018 taxable income.
Using the tax schedule in Table 2.3...
asked 3 hours ago -
The marketing class at CSUS had an average score of 150. An
educational analyst determined that...
asked 4 hours ago -
Justin Case has purchased a $250 000 home by putting 20 % down
and taking out...
asked 5 hours ago -
1. In a labor market, marginal cost for a firm is
____________.
a. recruiting cost
b....
asked 5 hours ago -
On January 1, 2019, ABC Company issued $60,000,000 of 20-year,
10.5% bonds when the market rate...
asked 6 hours ago -
39.4% of US homes continue to use a landline in addition to cell
phone service. 3...
asked 6 hours ago -
Starting with benzene, synthesize 1-phenyl-1-butyne.
Show intermediates and reagents.
asked 7 hours ago