Reference no: EM131056765
REH Corporation's most recent dividend was $2.42 per share, its expected annual rate of divident growth is 5%, and the required return is now 15%. A variety of proposals are being considered by management to redirect the firm's activities. Determine the impact on share price for each of the following proposed actions.
a. If the firm does nothing that will leave the key financial variables unchanged, the value of the firm will be $__________
b. If the firm invests in a new machine that will increase the dividend growth rate to 9% and lower the required return to 14%, the value of the firm will be $_______
c. If the firm eliminate an unprofitable product line that will increase the dividend growth rate to 7% and raise the required return to 19%, the value of the firm will be $_________
d. If the firm merges with another firm that will reduce the growth rate to 4% and raise the required return to 19%, the value of the firm will be $____________
e. If the firm acquires a subsidiary operation from another manufacturer that will increase the dividend growth rate to 9% and increase the requried return to 19%, the value of the firm will be $_______.
|
The logistic cumulative distribution function
: (b) Make probability paper for this distribution. Show lines on the probability scale for 1, 2, 5, 10, 20, 50, 80, 90, 95, 98, and 99% and show the calculation.
|
|
Calculate the holding period return
: Calculate the Holding Period Return: You invested to one of investment $45 per year last year. This year is worth $54 per share. Company also pays dividend $15 per share. What is the total return over the past year.
|
|
Subjective estimate of the uncertainty in the estimate
: Circuit breaker A mechanical life test of 18 circuit breakers of a new design was run to estimate the percentage failed by 10,000 cycles of operation. Breakers were inspected on a schedule, and it is known only that a failure occurred between cert..
|
|
Coupon bond-rate of return and price
: Suppose you buy a 9.6 percent coupon bond today for $1,090. The bond has 6 years to maturity. a. What rate of return do you expect to earn on your investment? Two years from now, the YTM on your bond has increased by 2 percent, and you decide to sell..
|
|
Determine the impact on share price
: REH Corporation's most recent dividend was $2.42 per share, its expected annual rate of divident growth is 5%, and the required return is now 15%. A variety of proposals are being considered by management to redirect the firm's activities. Determine ..
|
|
Develop a short list of what you see as the current debates
: Develop a short list of what you see as the current debates in the role of music education in the curriculum. Use this knowledge to conduct a database search for a range of journal articles on music education.
|
|
Project taking into account the flotation costs
: The expansion project at Zingerman requires an initial investment of $10,000,000. The target D/E ratio is 3/2 for the firm. Flotation costs are 10% for equity and 4% for debt. How much funds have to be raised for this project taking into account the ..
|
|
The market price of the firm preferred stock
: The market price of the firm’s preferred stock is $116.00. The preferred pays a 12.1% annual dividend on its $100 par value. Floatation costs are $4 per share. What is the cost of preferred equity when floatation costs are accounted for?
|
|
Based on constant growth model-what is the value of stock
: A firm recently paid (yesterday) its annual dividend of $0.50 per share. The dividend is expected to increase at a 10 percent rate for the foreseeable future. The required return is 15 percent. What are the dividends for each of the next 3 years? Bas..
|