Share to make the two offers equally attractive

Assignment Help Financial Management

Reference no: EM13930183

A business executive is offered a management job at Generous Electrical Company. They offer to give him a five-year contract which calls for a salary of $62,000 per year, plus 600 shares of their stock at the end of the five years. The executive is currently employed by Fearless Bus Company and they, too, offered him a five-year contract. It calls for a salary of $65,000, plus 100 shares of Fearless Stock each year. The stock is currently worth $60 per share and pays an annual dividend of $2 per share. Assume end-of-year payments of salary and stock. Stock dividends begin one year after the stock is received. The executive believes that the value of stock and the dividend will remain constant. If the executive considers 9% a suitable rate of return in this situation, what must the Generous Electric stock be worth per share to make the two offers equally attractive?

Reference no: EM13930183

Questions Cloud

Plan for an innovation in chronic disease : Prepare a detailed health promotion project plan for an innovation in chronic disease/determinant for an Australian community. Explore how you anticipate it will improve health outcomes for the chosen community.

What selection criteria are used : Which fields are displayed in the query results

Insured corporate cross-purchase buy-sell agreement : All the following statements concerning the use of an insured corporate cross-purchase buy-sell agreement are correct EXCEPT:

Difficult understanding and answering these problems : Difficult understanding and answering these problems.

Share to make the two offers equally attractive : A business executive is offered a management job at Generous Electrical Company. They offer to give him a five-year contract which calls for a salary of $62,000 per year, plus 600 shares of their stock at the end of the five years. what must the Gene..

Identify the event depicted in each journal entry : Identify the event depicted in each journal entry as asset source (AS), asset use (AU), asset exchange (AE), or claims exchange (CE).

What are some of the advantages of using a meta-analysis : What are some of the advantages of using a meta-analysis? Provide an example

Proceeds out of the insureds gross estate : It is often desirable to keep life insurance death proceeds out of the insured’s estate for tax reasons. Which of the following describe(s) a necessary condition for keeping the proceeds out of the insured’s gross estate?

List all the employees in the emp table : Change your answer from above to list those employees with the bottom 4 credit limits.

User Account

All Pages