What is its intrinsic stock price per share

Assignment Help Finance Basics

Reference no: EM132027214

Question: Palm Tree Corporation's value of operations is estimated to be $650 million. Palm Tree has $100 million in debt (it has no preferred stock) and 10 million shares of common stock outstanding. Suppose Palm Tree has decided to distribute to its shareholders $65 million, which it is presently holding in T-bills

a. Assume that Palm Tree has not yet made the distribution. What is Palm Tree's intrinsic value of equity? What is its intrinsic stock price per share?

b. Now, suppose that Palm Tree has just made the $65 million distribution in the form of dividends. What is Palm Tree's intrinsic stock price per share right after this dividend payment?

c. Suppose instead that Palm Tree has just made the $65 million distribution in the form of a stock repurchase. How many shares did Palm Tree repurchase? What is its intrinsic stock price per share right after the repurchase?

Reference no: EM132027214

Questions Cloud

How long will take you to pay off the loan : You have an outstanding student loan with required payments of $550 per month for the next four years. The interest rate on the loan is 8% APR.

How the potential perception of dependency might contribute : Explain the perceptions you have regarding people who receive means-tested welfare and how that perception might affect your work with clients.

What is the impact of the changes on a call on packers : Packers announces a major expansion into automobiles. This announcement causes the price of Packers stock to increase, but also causes an increase in price.

What is the p-value in a hypothesis test : What is the P-value in a hypothesis test? How do you know when to fail the null hypothesis?

What is its intrinsic stock price per share : Suppose instead that Palm Tree has just made the $65 million distribution in the form of a stock repurchase. How many shares did Palm Tree repurchase?

How does social science inquiry advance and evolve over time : Reflect on the concepts presented in the video and overview and the example of a growing body of research as captured in the article.

Principles of the z distribution or those associated : Should the assistant try to apply the principles of the Z distribution or those associated with the t distribution?

Find what will be the company return on equity : Pacific Packaging's ROE last year was only 5%; but its management has developed a new operating plan that calls for a debt-to-capital ratio of 40%.

How culture impacts a persons self-development : The culture in which were raised, the culture(s) we live or visit, and the cultures of others that we share relationships with all impact our world view.

User Account

All Pages