Shares of stock in avondale corporation

Assignment Help Financial Management

Reference no: EM131304708

You own 1,800 shares of stock in Avondale Corporation. You will receive a $1.80 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $80 per share. The required return on Avondale stock is 25 percent.

Ignoring taxes, what is the current share price of your stock? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Share price $

If you would rather have equal dividends in each of the next two years, how many shares would you sell in one year? (Do not round intermediate calculations. Round your answer to 2 decimal places. (e.g., 32.16))

Number of shares $

What would your cash flow be for each year for the next two years? Hint: Dividends will be in the form of an annuity. (Do not round intermediate calculations.)

Cash flow $

Reference no: EM131304708

Questions Cloud

Long-run effects of rise in safe-haven capital inflow : In the five years ending 2011, Switzerland enjoyed a fiscal surplus that averaged 1.3% of GDP, a trade surplus that averaged 2.6% of GDP, Use the appropriate graphs for a small open economy to illustrate and explain the theoretical long-run effects o..

Calculating risk of stock in relation to the market index : You are calculating the risk of ABC stock in relation to the market index and you find ABC’s beta is 2.75, the market index’s standard deviation is 25%, and the standard deviation of ABC’s residual error terms is 48%.What percentage of ABC’s total va..

Standards life insurance offers perpetuity : Standards Life Insurance offers a perpetuity that pays annual payments of $12,000. This contract sells for $250,000 today. What is the interest rate?

Shares of stock in avondale corporation : You own 1,800 shares of stock in Avondale Corporation. You will receive a $1.80 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $80 per share. The required return on Avondale stock is 25 percent. Ignoring tax..

Regulations require that taxes be withheld at time dividend : Dark Day, Inc., has declared a $5.80 per share dividend. Suppose capital gains are not taxed, but dividends are taxed at 10 percent. New IRS regulations require that taxes be withheld at the time the dividend is paid. Dark Day sells for $94.20 per sh..

Estimating relevant cash flows for each year of project life : A company is considering a new project. The CFO plans to calculate the project’s NPV by estimating the relevant cash flows for each year of the project’s life (i.e., the initial investment cost, the annual operating cash flows, and the terminal cash ..

Most likely to lead to an increase of the additional funds : Jefferson City Computers has developed a forecasting model to estimate its AFN for the upcoming year. All else being equal, which of the following factors is most likely to lead to an increase of the additional funds needed (AFN)?

Always increase company market value : Which of the following does NOT always increase a company’s market value?

User Account

All Pages