Calculate the ex-dividend price tomorrow morning

Assignment Help Finance Basics
Reference no: EM132662041

Net profit of Lily Fashion House Ltd in the current year is $2,575, 000. The company is planning to launch a project that will requires an investment of $745 000 next year. Today the company's stock has market value of $22/share. Lily Fashion House has the current capital structure of 60% in equity and 40% in debt.

Required:

a. The company is paying a cash dividend of $4.50/share plus an extra-cash dividend of $1.5/share. Tomorrow the stock will go ex-dividend. Explain why there is ex-dividend date and ex-dividend price? Calculate the ex-dividend price tomorrow morning. Assuming the tax on dividend is 25%?

b. How much dividend Lily Fashion House can pay its shareholders this year and what is dividend payout ratio of the company. Assume the Residual Dividend Payout Policy applies?

c. Floral Textile Ltd. is a daughter company of the Lily Fashion House Group and currently under a liquidation plan due to severe business contraction caused by the COVID 19 pandemic. The company plans to pay total dividend of $3.5 million now and $ 8.5 million one year from now as a liquidating dividend. The required rate of return for shareholders is 13.5%. Calculate the current value of the firm's equity in total and per share if the firm has 2.5 million shares outstanding?

Reference no: EM132662041

Questions Cloud

How is Iris Corporation taxed on the distribution : On November 15, Fresia Corporation, with current E & P of $320,000, distributes land to Iris. How is Iris Corporation taxed on the distribution
Explain the results of the different market multiple ratios : You may take the share price and no. of shares outstanding as on 31/12/2019 for computing the multiples.
Understanding of implementing database from design : Understanding of implementing Database from Design (ERD) by creating and running SQL scripts with the needed SQL commands
Explain the application of the selected nursing theory : Choose a nursing theory and research an article that includes a nursing theory and its utilization in nursing practice or nursing research.
Calculate the ex-dividend price tomorrow morning : Explain why there is ex-dividend date and ex-dividend price? Calculate the ex-dividend price tomorrow morning. Assuming the tax on dividend is 25%?
What is the apr with weekly compounding : Assume you expect to get a refund of $978. How large does the refund have to be for the APR to be 15%? What is the APR with weekly compounding?
Describe what you would expect to learn from measurement : Based on the case study, identify 6-8 measures for inclusion in a dashboard for the Community General Hospital Board. What organisational, national.
Current and capital gains yields on the bonds : Meade Corporation has 5-year, $1,000 par value bonds that have a yield to maturity of 7.5% and a 10% annual coupon rate.
What is a good example of a pure discount loan : What is a good example of an amortized loan? What is a good example of an interest-only loan? What is a good example of a pure discount loan?

Reviews

Write a Review

Finance Basics Questions & Answers

  Value maximization as a basis for examining managerial

Does such behavior create problems in using value maximization as a basis for examining managerial decision-making?

  Protecting against foreign exchange risk

Illustrate out the foreign exchange risk? What specific problems does foreign exchange present in an organization? How could an organization needing Euros in six months protect itself from currency fluctuations?

  Calculate giis weighted average cost of capital

Currently, GII's capital structure is 75% equity based and 25% debt based. GII is in 25% marginal tax bracket in France and has a cost of equity of 18% and an average debt cost of 7%. Calculate GII's weighted average cost of capital.

  How much interest was earned

Find the future value of an ordinary annuity of $8000 paid semiannually for six years at 6% annual interest compounded semiannually. How much was invested? How much interest was earned?

  What is the pre-tax cost of the company debt

Bermuda Cruises issues only common stocks and coupon bonds. The firm has a debt-equity ratio of 0.45. The cost of equity is 17.6 percent.

  What is the cost of equity capital for vwx

Explain homemade leverage and why it matters. What is the cost of equity capital for VWX? Using the M&M Proposition I with taxes, calculate the value of the firm at each debt level.

  The sausage system will save the firm 194000 per year in

kolbys korndogs is looking at a new sausage system with an installed cost of 522000. this cost will be depreciated

  Determining the investment in convertible bonds

You buy a convertible bond for $1000 and it has a conversion ratio of 50. Six years later, the stock of the firm is selling for $35 per share.

  What is the price of the share 5 years from now

If the required rate of return is 13 percent p.a., what is the price of the share 5 years from now? (round to nearest cent)

  Calculate the total service department cost

Motorcade Company has three service departments (S1, S2, and S3) and two production departments (P1 and P2). The following data relate to Motorcade's.

  Tabulate the incremental cash flows using their lcm

If the salvage values are $5000 and $10,000 for type A and type B, respectively, tabulate the incremental cash flows using their LCM for hand and spreadsheet solutions.

  Financial planning process is of high value to a health

financial planning process is of high value to a health care organization

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd