Successfully implement dividend policy change

Assignment Help Financial Management
Reference no: EM131502810

Osborn wants to implement a plan which includes 15 years of dividend payments growing at a certain rate and no dividends afterwards. Furthermore, Osborn does not want the stock price of at his company to be affected by this dividend policy change. The company stocks will pay $5.1 a year from today and the company stocks are currently priced at 5.5% (perpetual) growth rate. If the required rate of return is still 14%, how much annual growth should one aim to successfully implement dividend policy change.

(the calculated stock price for the previous part was 64.30 dollars)

Reference no: EM131502810

Questions Cloud

Free cash flow to equity : Company ABC's free cash flow to equity (FCFE) was $50 million at the beginning of the year.
What is the future value at the end of the third year : What is the future value at the end of the third year?
Bonds and how they related to capital budgeting : Common Shares, Preferred shares and Bonds and how they related to capital budgeting.
Who is credited with the efficient markets theory : A study conducted by Eugene Fama, who is credited with the "efficient markets theory" which made the CAPM possible, and Kenneth French in early 1990s resulted
Successfully implement dividend policy change : how much annual growth should one aim to successfully implement dividend policy change.
What should these shares be trading : what should these shares be trading for today?
Coupon rate if interest is paid semiannually : What is the coupon rate if interest is paid semiannually?
Saving for retirement : You’re saving for retirement. You think you need an income of $80,000 per year for 30 years after retirement and you have 40 years to go until retirement.
What is the companys break-even point : What is the company’s break-even point?

Reviews

Write a Review

Financial Management Questions & Answers

  After tax salvage value

Kennedy Air Services is now in the final year of a project. The equipment originally cost $22 million, of which 75% has been depreciated. Kennedy can sell the used equipment today for $5.5 million, and its tax rate is 40%. What is the equipment's aft..

  Considering the construction of a new plant

Microwave Oven Programming, Inc is considering the construction of a new plant. The plant will have an initial cash outlay of $15 million, and will produce cash flows of $5 million at the end of year 1, $6 million at the end of year 2, and $4 million..

  What is the amount of net working capital

Zantel Inc. has current assets of $4,700, net fixed assets of $24,300, short-term debt of $1,000, total current liabilities (including short-term debt) of $4,100, and long-term debt of $14,000. What is the value of Zantel’s total equity on balance sh..

  About flotation costs

Which of the following statements about flotation costs is incorrect: Flotation costs for debt is typically lower than flotation costs for equity. As a company issues more equity the flotation costs, as a percentage of the capital raised, decreases. ..

  Standard deviation of the rate of return on this investment

A project has a 0.52 chance of doubling your investment in a year and a 0.48 chance of halving your investment in a year. What is the standard deviation of the rate of return on this investment?

  Compute net profit margin and return on assets

Compute the Net profit margin, Return on assets, Total asset turnover, DuPont analysis, Operating income margin, Return on operating assets, Operating asset turnover for 2011, 2010, and 2009:

  What will be your annual loan payments

You need $19,000 to purchase a used car. Your wealthy uncle is willing to lend you the money as an amortized loan. He would like you to make annual payments for 5 years, with the first payment to be made one year from today. He requires a 9% annual r..

  The dividends are expected to grow at a consent rate

The Jackson-Timberlake Wardrobe Co. just paid a dividend of $1.95 per share on its stock. The dividends are expected to grow at a consent rate of 4 percent per share indefinitely. If investors require a rate of return of 10.5 percent on The Jackson-T..

  How much interest was included in the first payment

Jan sold her house on December 31 and took a $25,000 mortgage as part of the payment. How much interest was included in the first payment?

  Current price of the stock using the dividend growth model

For Stock A, the cash dividend expected one year from now is $9 [D1]. The dividends are expected to grow at a constant rate of 4% per year for ever. The required rate of return the common stock is 16%. Then calculate the current price of the stock us..

  What is the payback period

A project requires an investment of $500 today, and will generate CF from Assets equal to $200 each year for ten years (first $200 to be received exactly one year from today). The annual rate is 12%. What is the payback period? What is the discounted..

  What is the bonds yield

A five-year bond provides a coupon of 5% per annum payable semiannually. Its price is 104. What is the bond's yield? You may find Excel's Solver useful.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd