User Account

All Pages

What is the current price-p0

Assignment Help Finance Basics
Reference no: EM132694648

Alpha Corporation has just paid its annual dividend and is looking forward to another successful year ahead. The company had free cash flow for the year just ended of $1 billion, all of which it just paid out to its shareholders as a dividend. Right now, shareholders do not believe that Alpha has any growth opportunities, so they expect the annual cash flow and dividend stream to remain unchanged for the foreseeable future. Alpha has 100 million shares outstanding. The company is entirely equity-financed. The cost of equity for the company is estimated to be 10%. The capital market is efficient and there is no tax.

Alpha's CEO now proposes that the company skip its dividend one year from now and instead repurchase its stocks, using the entire amount of the coming year's $1 billion free cash flow. What will the price at the end of next year, P1, be? What is the current price, P0?

Reference no: EM132694648

Questions Cloud

What would moria mining report as pre-tax income : What would Moria Mining report as pre-tax income if it recorded bad debt expense at the time it wrote-off the receivable instead of the methods
Expected return of a stock that has a beta of 2 : Suppose the market portfolio has an expected return of 10% and a standard deviation of returns of 25%. The risk-free rate is 5%. Assume that the CAPM holds.
Determine the amount of from agi deduction the taxpayer : Taxpayers filing a joint return whose deductions for the tax year follow. Determine the amount of From AGI deduction the taxpayers will claim for the year.
Journalize the adjusting entry for the inventory shrinkage : Journalize the adjusting entry for the inventory shrinkage for Pulmonary Company for the year ended March 31, 2019
What is the current price-p0 : What will the price at the end of next year, P1, be? What is the current price, P0?
Journalize the entries for Sievert Co and Bray Co : Journalize the entries for Sievert Co. and Bray Co. for the sale, purchase, and payment of amount due. Assume that all discounts are taken
What are the tax consequences of granting the membership : What are the tax consequences of granting the membership interests to Luke and the LLC on the grant date and the vesting date
Problem - Journalize the merchandise transactions : Problem - Journalize the following merchandise transactions: Sold merchandise on account to Smith Inc., $7,500, with terms 2/10, n/30
Design a whole group lesson on phoneme : Design a whole group lesson on the phoneme /k/ appropriate for "Class Profile" kindergarten students using the "COE Lesson Plan Template."

Reviews

Write a Review

Finance Basics Questions & Answers

  What would happen to the bid-ask spread

When a currency has a very low trading volume or has volatile movement in prices, what would happen to the bid-ask spread?

  Explain sexual harassment

Explain sexual harassment, its categories, and the problems that stem from the issue

  Compute the standard deviation of the returns

Suppose the returns for Stock A for last six years was 4%, 7%, 8%, -2%, 9%, and 7%.

  Identify which of the two annuities would be a better option

Identify which of the two annuities would be a better option for your client.

  Explain the many ways transaction costs are problematic

Explain the many ways transaction costs are problematic in financial markets. As part of your response give an actual example with a numerical breakdown that illustrates this problem.

  Find the beta of stock

Consider the following two scenarios for the economy and the expected returns in each scenario for the market portfolio, an aggressive stock A, and a defensive

  Galveston shipyards is considering the replacement of an

galveston shipyards is considering the replacement of an eight year old riveting machine with a new one that will

  Alculate your monthly payment and the amount of interest

If First Federal offers to structure the 9.5%, $100,000, 1 year loan on a monthly payment basis, calculate your monthly payment and the amount of interest paid at the end of the year. What is your EAR?

  What is your rate of return if the stock sells

Assume you purchased the right to sell 2,000 shares of JC Penney stock in January 2013 at a strike price of $27 per share. Suppose the stock sells for $25 per.

  Assume a manager of a publicly traded company is intending

managers are responsible for ensuring fair and accurate financial reporting. managers also have inside information that

  What is the expected price of the company

The dividend is expected to frow at a constant rate of 5% per year. What is the expected price of the company if the required return is 8%.

  What is homecraft''s break even output in units of play

Fixed advertising expenses equal $50,000 per year. Each play set sells for $1,800. What is HomeCraft's break - even output in units of play sets?

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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