What is the price of consolidated stock

Assignment Help Finance Basics
Reference no: EM132815931

Consolidated Pasta is currently expected to pay annual dividends of $10 a share in perpetuity on the 2.1 million shares that are outstanding. Shareholders require a 10% rate of return from Consolidated stock.

a. What is the price of Consolidated stock? (Do not round intermediate calculations.)

b. What is the total market value of its equity? (Enter your answer in millions.)

Consolidated now decides to increase next year's dividend to $20 a share, without changing its investment or borrowing plans. Thereafter the company will revert to its policy of distributing $10 million a year.

c. How much new equity capital will the company need to raise to finance the extra dividend payment? (Enter your answer in millions.)

d. What will be the total present value of dividends paid each year on the new shares that the company will need to issue? (Enter your answer in millions.)

Reference no: EM132815931

Questions Cloud

What is the market value of abc debt : The risk-free rate is 3.5 percent per year compounded continuously. What is the market value of ABC's debt based on the Black-Scholes model?
Describe the relationship characteristics and dynamics : Select at least two families/relationships from your chosen story and explain the relationship characteristics and dynamics between individuals.
What are the warranty expense balances : Using the cash approach, what are the warranty expense balances for 2020 and 201 and prepare the entries
Calculate the cost of equity capital for infosys : Calculate the cost of equity capital for Infosys, assuming that the Mumbai market is not integrated, and Infosys were only listed in its home market.
What is the price of consolidated stock : Consolidated Pasta is currently expected to pay annual dividends of $10 a share in perpetuity on the 2.1 million shares that are outstanding.
How could use new technologies such as ai to support : If you were the owner of a medium to large company, how could you use new technologies such as AI to support your daily opeeations?
What is the combined effect on cash available : The facility manager estimates ending balances for accounts receivable will decrease and accounts payable will increase.
Why is the changing of gray matter important in adolescene : In the adolescent brain, what region is changing the most and what is the function of this region? Why is the changing of gray matter important in adolescene?
Amount of the projected cash disbursements : What is the amount of the projected cash disbursements for accounts payable for Quarter 3 of the next year? Assume that a year has 360 days.

Reviews

Write a Review

Finance Basics Questions & Answers

  Determine a feasible atsp solution and evaluate its quality

Show that, in the ATSP formulation, the connectivity constraints (6.61) and the subtour elimination constraints (6.62) are equivalent.

  Why most analysts look at correlations between differences

why do most analysts look at correlations between their differences rather than correlations between the original series?

  What principal is owed immediately following the payment

CTL (Concrete Testing Lab) borrowed $40,000 for new equipment at 12% per year, compounded quarterly. It is to be paid back over 4 years in equal quarterly.

  Determine the amount the exporter will recieve

Determine the amount the exporter will recieve if he holds the b/a until maturity and also the amount the exporter will receive if he discounts the b/a with the importer/s bank.

  Baker brothers has a dso of 40 days and its annual sales

day salesoutstanding baker brothers has a dso of 40 days and itsannual sales are 7300000.nbsp what is its accounts

  Find big 4 australian banks

Why are the big 4 Australian banks considered by many as "too big to fail"?

  Asume that one year after tealls bonds were issued going

1. one year ago teall inc. issued a 20-year 6 annual coupon bond at a par value of 1000. suppose that one year after

  What is meant by the term gigo

What is meant by the term GIGO in reference to the practical application of the DCF valuation procedure for commercial property?

  What is the daily equivalent rate

You receive 6.5% per annum on a 138-day deposit. What is the effective rate? What is the daily equivalent rate? What is the 138-day discount factor?

  Compute the equilibrium offer price that the underwriter

1. suppose you bought a five-year zero-coupon treasury bond for 800 per 1000 face valuea. what is the rate of return on

  Calculate the interest rate associated

What impact, if any, would the fact that the firm could stretch its accounts payable (net period only) by 20 days from supplier A have on your answer in part (b) relative to this supplier?

  Discuss the possible alternatives for loading and hauling

Discuss the possible alternatives for loading and hauling that the contractor may consider for the project.

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