Should green gadgets cut its dividend

Assignment Help Financial Management

Reference no: EM131900829

Green Gadgets Inc. is trying to decide whether to cut its expected dividend for next year from $9 per share to $ 6 per share in order to have more money to invest in new projects. If it does not cut the dividend, Green Gadgets' expected rate of growth in dividends is 5 percent per year and the price of their common stock will be $ 95 per share. However, if it cuts its dividend, the dividend growth rate is expected to rise to 8 percent in the future. Assuming that the investor's required rate of return for Green Gadgets' stock does not change, what would you expect to happen to the price of its common stock if it cuts the dividend to $ 6 ? Should Green Gadgets cut its dividend?

Reference no: EM131900829

Questions Cloud

What are three risks and threats of the user domain : What are three risks and threats of the User Domain? Why do organizations have acceptable use policies (AUPs)?

Determine training and development to elevate performance : A needs assessment is a systematic means of analyzing existing standards and conditions against desired ones. The difference between the current and desired.

Comprehensive enterprise security risk assessment : Describe the components that make up comprehensive enterprise security risk assessment

Identify a new product or service-either recently rolled out : Investing in products and services should produce returns so that stockholders, stakeholders, and others are interested in the organization.

Should green gadgets cut its dividend : what would you expect to happen to the price of its common stock if it cuts the dividend to $ 6. Should Green Gadgets cut its dividend?

What is the projected dividend for coming year : Frey Corp. is experiencing rapid growth. What is the projected dividend for the coming year?

Describe the steps necessary to accomplish task : You need to deploy an application that Litware's users can access over the Internet. Describe the steps necessary to accomplish this task.

Calculate a companys weighted average cost of capital : Program Student Learning Outcomes are broad statements that describe what students should know and be able to do upon completion of their degree.

Identify and write down things that you were right : Identify and write down things that you were right about in your original definition and things that were incomplete or wrong) in your definition.

User Account

All Pages