What are the dividends per share in the second year

Assignment Help Financial Accounting
Reference no: EM132998956

XYZ Corporate starts with $20,000 book value of equity capital and zero debt. The ROE for the company is 15% and the required rate of return for the company is 12%. There are 500 shares outstanding. Now, XYZ Corporation decides that it will always reinvest 60% of earnings back in the company and pay out 40% of earnings each year in dividends to the shareholder. Thus, dividends for this company will grow at a constant rate.

Problem a. What are the dividends per share (DPS) in the second year?

Problem b. What is the growth rate in dividends from the first year to the second year?

Reference no: EM132998956

Questions Cloud

Current market values of debt and equity : In a purely conglomerate merger, the post-merger firm value is the sum of the two pre-merger values because there is no synergy.
Calculate the price of share of stock for xyz company : The dividends and their growth rate, and the constant growth stock pricing formula, Calculate the price of share of stock for XYZ company in the first year?
What will be the value of your investment : You have $10 000 to invest. If you invest it at 11.2% p.a. for six months, what will be the value of your investment at the end of the 18-month period
Proposal and new venture pitch : Proposal and New Venture Pitch - how they would like this video to look and the way they intend to convey the core message
What are the dividends per share in the second year : What are the dividends per share (DPS) in the second year? XYZ Corporate starts with $20,000 book value of equity capital and zero debt.
How much cash flow does the company earn in the second year : How much cash flow does the company earn in the second year? XYZ Corporate starts with $20,000 book value of equity capital and zero debt.
What is the net realizable value : Sales returns and allowances are estimated at 3% of the gross A/R balance. What is the net realizable value of the A/R of Trucker company for December 31 2015
Price of the bond-callable convertible bond : You have been hired to analyze a new 20-year Callable Convertible Bond. The bond pays a 6% coupon annually, and is selling at par.
How much cash is reinvested in the company : How much cash is reinvested in the company from the first-year earnings? XYZ Corporate starts with $20,000 book value of equity capital and zero debt.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

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