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Kendra Brown is analyzing the capital requirements for Reynolds Corporation for next year. Kendra forecasts that Reynolds will need $14 million to fund all of its positive-NPV projects, and her job is to determine how to raise the money. Reynolds's net income is $10 million, and it has paid a $4.00 dividend per share (DPS) for the past several years (1.0 million shares of common stock are outstanding); its shareholders expect the dividend to remain constant for the next several years. The company's target capital structure is 40% debt and 60% equity.
Suppose Reynolds follows the residual model and makes all distributions as dividends. How much retained earnings will it need to fund its capital budget? Round your answer to the nearest dollar.
If Reynolds follows the residual model with all distributions in the form of dividends, what will be its dividend per share? Round your answer to the nearest cent.
What will be payout ratio for the upcoming year? Round your answer to two decimal places.
If Reynolds maintains its current $4.00 DPS for next year, how much retained earnings will be available for the firm's capital budget? Round your answer to the nearest dollar.
Cecelia Thomas is a sales executive at a Baltimore firm. She is 25 years old and plans to invest $3,000 every year in a retirement account,beginning at the end of this year until she turns 65 years old. If the investment will earn 9.75 percent annu..
What is the present value of $3,225 per year, at a discount rate of 7 percent, if the first payment is received 8 years from now and the last payment is received 21 years from now?
Caughlin Company needs to raise $45 million to start a new project and will raise the money by selling new bonds. The company will generate no internal equity for the foreseeable future. What is the true initial cost figure the company should use whe..
Your hospital has billed charges of $4,000,000 in February. Contractual adjustments are expected to be 20% of billed charges.
You are tasked to sell a high priced item on Ebay. This could be a car, house, etc. First, describe what you are selling. Second, based on what we learned so far, how would you sell it? What areas of the selling process are important? Who are the buy..
Suppose you know that a company’s stock currently sells for $66.80 per share and the required return on the stock is 10 percent. You also know that the total return on the stock is evenly divided between capital gains yield and dividend yield. If it’..
Parker & Stone, Inc., is looking at setting up a new manufacturing plant in South Park to produce garden tools. The company bought some land six years ago for $4.5 million in anticipation of using it as a warehouse and distribution site, but the comp..
Investors require a(n) 6.1 % annual return on these bonds. What should be the selling price of the bond?
Jiminy’s Cricket Farm issued a bond with 20 years to maturity and a semiannual coupon rate of 6 percent 2 years ago. The bond currently sells for 92 percent of its face value. The company’s tax rate is 35 percent. What is the pretax cost of debt?
A couple will retire in 30 years; they plan to spend about $ 116,914 a year in retirement, which should last about 29 years. They believe that they can earn 8 percent interest on retirement savings. How much do they need to have saved in 30 years in ..
If success and failure are equally likely, what is the NPV of the project? What is the value of the option to abandon?
A Private Investor purchases a treasury bill with a $10,000 par value for $ 9,645. 100 days later, she sells the t-bill for 9,823. What is the investors expected annualized yield from this transaction?
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