Determine gate 5 new price

Assignment Help Business Economics
Reference no: EM131950761

Gate 5 Corporation expects earnings per share of $10 in the coming year. Rather than reinvest these earnings, it plans to pay its earnings as dividend. With no growth, Gate 5 current share is $105.26.

Assume that Gate 5 cuts it dividend payout rate to 60% and use the retained earnings to open new distribution centers. The return on investment in these centers is expected to be 15%. If the risk is equivalent, then the equity cost of capital is unchanged. Determine Gate 5 new price?

a) $285.71

b) $63.16

c) $105.26

d) $171.43

PLEASE SHOW ME HOW TO GET THIS ANSWER

Reference no: EM131950761

Questions Cloud

Prepare the journal entry to record the sale : Suppose Moody’s bond rating agency downgraded the risk rating of the bonds motivating Tanner. Prepare the journal entry to record the sale.
Which is the best strategy : Currently, the stock price is $52 and the riskfree rate is 10.5% with continuous compounding. 1-yr $50 call price is $14 and 1-yr $50 put price is $8.
What had been budgeted at the beginning of the period : What are some of the possible reasons that actual results may differ from what had been budgeted at the beginning of the period?
Calculate the internal rate of return on an investment : Calculate the Internal Rate of Return on an investment that costs $250 today and hasa single cash flow at the end of three years equal to $427.
Determine gate 5 new price : If the risk is equivalent, then the equity cost of capital is unchanged. Determine Gate 5 new price?
How a change in the money supply would affect the economy : Finally, evaluate how a change in the money supply would affect the economy, including interest rates, inflation, and unemployment.
What is the total cost of ordering and carrying inventory : What will the average inventory be? What is the total cost of ordering and carrying inventory?
What will you pay for beecham stock today : If the equity cost of capital is 7%, what will you pay for Beecham's stock today?
Explain why someone would want to buy treasury bills : explain why someone would want to buy Treasury Bills rather than invest in mortgage-backed securities. Explain in terms of risk factors.

Reviews

Write a Review

Business Economics Questions & Answers

  Economics assignment

This document contains various important questions and their appropriate answers in the subject field of Economics.

  Demand and supply curves

Economics is the study of the principles governing the allocation of scarce means among competing ends when the objective of the allocation is to maximize the attainment of the ends.

  Long-run perfectly competitive equilibrium for the firm

Evaluate Government intervene and correct this situation?(a) Explain the concept of a concentration ratio. A rise in the price of magarine Explain the impact of external costs and external benefits on resource allocation long-run perfectly c..

  Supply and demand diagrams

Explain each of the following using supply and demand diagrams,  With the use of a graph, explain how these two programs affect cigarette consumption and the price of cigarettes.

  Case study: fisher-price toys

The case study of the Fisher-Price Toys, Inc., a popular case in basic economics and management from the prestigious Harvard Business School.

  Draw the production possibility curve

Draw the production possibility curve and a. Define consumer surplus and producer surplus.

  Tax revenue

The Australian government administers two programs that affect the market for cigarettes

  Maximize total welfare

How many tickets to sell to maximize total welfare.

  Difference between the cv and the ev

The change in consumer surplus (?CS) is not "theoretically" justifiable like the CV and EV but it continues to be the most widely used measure of consumer welfare change. Explain how this can be reconciled

  Depict von neumann-morgenstern utility index u in a diagram

Depict the von Neumann-Morgenstern utility index u in a diagram

  What is the market solution

What is the market solution (market price and quantity) and What is the total surplus of the society under the market solution

  Calculate gross national product and net national product

Calculate gross national product and net national product

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