Expects annual dividends-pay constant dividend amount

Assignment Help Financial Management

Reference no: EM13942971

Lyons Corp. expects annual dividends of $0.55, $0.85, $1.15 a share over the next three years, respectively. In year 4 and thereafter, Lyons expects to pay a constant dividend amount of $2.00 a share. The required rate of return for Lyons is 9.0%, and the currently this stock is selling for $20.52. Should you invest in this stock?

Reference no: EM13942971

Questions Cloud

New project available that requires an initial investment : Stackhouse Industries has a new project available that requires an initial investment of $5.9 million. The project will provide unlevered cash flows of $815,000 per year for the next 20 years. The company will finance the project with a debt-to-value..

Stock market indices are used for all of the expert : Stock market indices are used for all of the following except: a) to serve as a benchmark for judging performance of asset managers b) to help analyze stock market returns on a global basis c) to help perform technical analysis of the overall market ..

Substituting debt in the capital structure for common stock : Golden Inc. is considering shifting its capital structure by substituting debt in the capital structure for common stock. At the debt ratio of 30%, the firm estimates that te average earnings per share (EPS) would be $3.12 and the standard deviation ..

Standard deviation-portfolio-stock beta : In isolation, stock A’s standard deviation ( σ ) = 10%, stock B’s σ = 15%, and stock C’s σ = 20%. In a portfolio, stock A’s beta ( β ) = 2, stock B’s β = 1.5, and stock C’s β = 1.0. Which of the following is true?

Expects annual dividends-pay constant dividend amount : Lyons Corp. expects annual dividends of $0.55, $0.85, $1.15 a share over the next three years, respectively. In year 4 and thereafter, Lyons expects to pay a constant dividend amount of $2.00 a share. The required rate of return for Lyons is 9.0%, an..

Firm is considering two mutually exclusive-required project : Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 8 percent, and that the maximum allowable payback and discounted paybac..

Component cost of debt for use in the wacc calculation : Morrison Company sold a noncallable bond several years ago that now has 20 years to maturity. This bond has 9.25% annual coupon, paid semiunnually, sells at a price of $1,075, and has a par value of $1,000. If the firm's tax rate is 40%, what is the ..

Calculate the return on equity for firm U : There are two firms: firm U and firm L. both firms have $50M total assists and $8M EBIT (earnings before interest and taxes).. Firm U is an unleveraged firm without debt. Firm L ia a leveraged firm with 50% of debt and 50% of common equity. The pre-t..

Percent coupon bonds outstanding : Information on Janicek Power Co., is shown below. Assume the company’s tax rate is 35 percent. Debt: 9,500 9 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 99 percent of par; the bonds make semiannual payments. ..

User Account

All Pages