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!
It's early morning on January 1st, 2008 and Mr Duby is thinking about investing in ABC stocks. ABC reported earnings per share (EPS) of $2 as of December 31, 2007 but paid no dividends. Earnings are expected to grow at 16% per year for the following 4 years. ABC will start paying dividends for the first time on December 31, 2011, distributing 40% of its earnings to shareholders. Earnings growth will slow to 7.5% per year for the next 5 years (i.e. from January 1, 2012 through December 31, 2016). Starting December 31, 2016 ABC will pay out 70% of its earnings in dividends and earnings growth will stabilize at 2% per year forever. The required rate of return on ABC stock is 10%.
a. How much should Mr. Pitt pay for a share of ABC stock given the above earnings and dividend forecast?
b. What would be the value of the stock today if Mr Duby could convince ABC directors to change the company's future dividend policy to pay out 100% of its December 31, 2016 earnings in dividends (i.e. the retention ratio would become 0%) and maintain this dividend policy forever? In other words, starting on December 31, 2016, should the company pay out all of its earnings in dividends instead of pursuing their growth strategy?
how much should you deposit at the end of every six months? how much of the $4000 comes from deposits and how much comes from interest?
Mileage, which includes the gas mileage schedules for each driving usage type. Each schedule lists the gas mileage in miles per gallon based on the weight class and engine. States, which lists states and their associated regions. Gas Prices, which in..
If the current market interest rate is 7.4 percent, and the bond is priced at $925, what's the bond's present value?
Compute a delta-gamma-theta approximation for the value of the call after 1, 5, and 25 days.
Why was it a fallacy to assign a ‘AAA' ratings to these securities backed by these mortgages?
What is the payback for this investment ? The average accounting return method
What is the maximum cost the company would be willing to pay for this project?
The spot rate is $1.15 per euro. The interest rate in Germany is 2% p. a. and the interest rate in the U. S. is 4% p.a.
According to the textbook, the net present value rule states that “An investment should be accepted if the net present value is positive and rejected if it is negative.” What does a net present value of zero mean? If you were analyzing a project with..
The Super-Growth Company just declared a dividend per share of $5.00. Analysts expect the dividends to grow at 23% for the next three years, then drop to 17% per year for 2 years, before converging to the industry median growth rate of 8 %. The compa..
If this growth rate continues, what would be the stock price in five years if the P/E ratio remained unchanged ?
What is the balance after the first annual payment on a $180,000 loan for 20 years with a 6% interest rate and a payment of $15,693.22?
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