What is the price of consolidated stock

Assignment Help Managerial Accounting
Reference no: EM133013118

Question - Consolidated Pasta is currently expected to pay annual dividends of $10 a share in perpetuity on the 2.6 million shares that are outstanding. Shareholders require a 8% rate of return from Consolidated stock.

a. What is the price of Consolidated stock?

b. What is the total market value of its equity?

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?

d. What will be the total present value of dividends paid each year on the new shares that the company will need to issue?

e. What will be the transfer of value from the old shareholders to the new shareholders?

f. Is this figure more than, less than, or the same as the extra dividend that the old shareholders will receive?

Reference no: EM133013118

Questions Cloud

How can correlation and causation analysis assist hr : How can correlation and causation analysis assist HR professionals? Please provide examples. Related to excel and HRM
Determine total cost of may raw material purchases : Simple Manufacturing Company makes units that each requires 3 pounds of material at $3 per pound. Determine total cost of May raw material purchases
What is the turnover rate last month : Q1. ComQ1. Company X has 1000 employees. There were 50 separations in the company last month. What is the turnover rate last month?
What is the percent of payroll spent on training : The training cost per employee is $250. The total payroll is $500,000. The training reduces customer service costs by $3000.
What is the price of consolidated stock : Consolidated Pasta is currently expected to pay annual dividends of $10 a share in perpetuity. What is the price of Consolidated stock
Jobs-discretion and skill by irena grugulis : 1 What were the main differences between the way
Discuss three types of sales incentive plans : Q1. Briefly discuss three types of sales incentive plans.
Competitiveness and intercultural conflict in qatar case : 1) What do you recommend as the best solution for all stakeholders in the partnership? How do you see your solution working?
Title vii of the civil rights act of 1964 : Which of the following is legal under Title VII of the Civil Rights Act of 1964?

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Manage budgets and financial plans

Explain the budgeting process and its importance to a business, identifying the components of different budgets, forecast estimates for inclusion in the budgets.

  Prepare a retained earnings statement

Prepare a retained earnings statement for the year and Prepare a stockholders' equity section of given case.

  Prepare a master budget for the three-month period

Prepare a master budget for the three-month period.

  Construct the companys direct labor budget

Construct the company's direct labor budget for the upcoming fiscal year, assuming that the direct labor workforce is adjusted each quarter to match the number of hours required to produce the forecasted number of units produced.

  Evaluate the predetermined overhead rate

Evaluate the Predetermined Overhead Rate

  Determine the company''s bid

Determine the company's bid if activity-based costing is used and the bid is based upon full manufacturing cost plus 30 percent.

  Compute the pool rates for the different activities

Complete the schedule to compute the pool rates for the different activities.

  Prepare Company financial statements

Prepare Company financial statements

  Prepare an analysis of terracycles

This individual assignment is based on the TerraCycle Inc.

  Discuss the ethical issues

Discuss the ethical issues

  Political resources in emerging markets

Calculate the GDP in Income Approach  and Expenditure Approach

  Management accounting - ehsan electronics company

A new plant accountant suggested that the company may be able to assign support costs to products more accurately by using an activity based costing system that relies on a separate rate for each manufacturing activity that causes support costs.

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