Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Smart' Ltd. Has just paid a dividend of £0.22 per share. The market expects this dividend to grow constantly in each future year at the rate of 7% p.a. The cost of capital for Smart' Ltd. is currently 9%. As soon as the dividend was paid, however, the Board of Smart' Ltd. decided to finance a new project by retaining the next three annual dividend payments. The project is seen by the market to be of riskier than existing projects and the cost of capital is estimated to be 10%. It is expected that the dividend declared at the end of the fourth year from now will be £0.35 per share and will grow at the rate of 8% p.a. from then on. You hold 1,000 shares in Smart' Ltd. and your personal circumstances require that you receive at least £200 each year from this investment.
(i) Assuming that there is a perfect market in Smart' Ltd.'s shares, and that the market uses a dividend valuation model, show how the market value of the shares has been affected by the Board's decision.
(ii) Show how you can still achieve your desired consumption pattern in the first three years while improving your expected dividend stream from then on.
(iii) What would be the Board's decision if the dividend payment was expected increase to only 25p per share? Explain why you came to this conclusion.
(iv) Briefly comment on the limitations of this approach to share valuation. To what extent do you agree with the view that 'valuation is as much an art as a science'
You buy 700 shares of stock at a price of $70 and an initial margin of 55 percent. If the maintenance margin is 40 percent, at what price will you receive a margin call? (Do not round intermediate calculations. Round your answer to 2 decimal place..
Explain how debt can be viewed as an option portfolio.? in below is my text book
At my work, I support a particular group of people with back up assistance of a consultant from a third party supplier. This third party supplier backs me up as well as a colleague of mine who supports an entirely separate group of customers.
Master Card and other credit card issuers must by law print the Annual Percentage Rate (APR) on their monthly statements. If the APR is stated to be 18.00%, with interest paid monthly, what is the card's EFF%?
Calculate (a) the expected return and (b) the volatility (standard deviation) of a portfolio that consists of a long position of $10,000 in Johnson & Johnson and a short position of $2000 in Walgreen’s.
A firm borrows $200,000 at 9 percent nominal interest, compounded monthly and is to repay the loan in 12 years with regular monthly payments of 52276.06.
What are the three (3) types of variances that explain the change in line items on financial statements, such as revenue? Explain each of the three (3).
How does the financial reporting of general long-term liabilities differ from the financial reporting of other long-term liabilities?
This assignment is about weather derivatives. Please post answers to the three questions in the space that'll open up once you click "Create Journal Entry". How might Southern California Edison use electricity futures or options to protect or impr..
1. Suppose that the one-year interest rate is 3 percent in France, the spot exchange rate is €0.0109/Y, and the one-year forward exchange rate is €0.0111/Y What
Find the after-tax return to a corporation that buys a share of preferred stock at $40, sells it at yearend at $40, and receives a $4 year-end dividend.
How would the planning of a promotional program differ for a global brand vs. a regional or local brand?
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd