What is the price of maxwells stock today

Assignment Help Financial Management
Reference no: EM13211572

1. You have invested 500 shares in Maxwell's Company Limited. For the next three years you will receive dividends of $2.50 per share in year one, $2.75 per share in year two and a liquidating dividend of $25.00 in year three. Assume Maxwell Ltd has a required rate of return is 12 percent and dividend is an annuity.

a) What is the price of Maxwell's stock today?

b) You wish to maintain an equal dividend cash flow through the three year period, how would you accomplish this using the concept of homemade dividend.

2. Martha Stewart's expected net income for next year is $2.5 million. The company target and current structures are 40 percent debt and 60 percent common equity. The optimal capital budget for next year is $1.75million.

a) What is the expected payout ratio if Martha Stewart's uses the residual distribution model to determine next year's distribution and makes all distributions in the form of dividends?

b) Why would paying cash dividend be a better way for a firm to repurchase stock?

Reference no: EM13211572

Questions Cloud

Explain concentrated hydrochloric acid and hcl : Concentrated hydrochloric acid, HCl, has a composition of 37.5 %. The solutes molar mass is 36.461 g/mol. You may assume the molar mass of water is 18.015g/mol.
Calculate the call using the black-scholes model : Calculate the call using the Black-Scholes model. Show all workings and what would be the price of a put with an exercise price of $120 and the same time until expiration? Show all workings.
Explain what is the mass of the solute : The concentration of a 300 ML sample of CaCl_2_ solutionis .256M. What is the mass of the solute?
Explain what is the molecular formula for ibuprofen : The molecular weight of ibuprofen was determined by mass spectroscopy to be 206.287 g/mol. What is the molecular formula for ibuprofen?
What is the price of maxwells stock today : What is the price of Maxwell's stock today and what is the expected payout ratio if Martha Stewart's uses the residual distribution model to determine next year's distribution and makes all distributions in the form of dividends?
Explain what is the empirical formula for the oxide of iron : magnetite was found to contain 2.5698 g of iron and 0.9816 g oxygen. What is the empirical formula for this oxide of iron?
Define what is the emperical formula : Isoprene is a compoud composed only of carbon and hydrogen. It is 11.84%H. what is the emperical formula?
What rate of return can he expect : What is the value of firm L according to MM's proposition 1 with corporate taxes and micky is the holder of $30,000 worth of L's stock. What rate of return can he expect, assuming a dividend payout of 100%.
State what is the molar volume change for the unfolding : At this temperature, applying about 10,000 bar of pressure can dentature a protein. What is the molar volume change for the unfolding process?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the weighted average expected rate of return

What is the weighted average expected rate of return for all investments made in January and what is the weighted average actual rate of return for all investments ending in December?

  Should the new lathe be purchased

The firm estimates the revenues and expenses for the new and the old lathes to be as shown in the following table. The firm is subject to a 40% tax rate. Should the new lathe be purchased?

  Black-scholes option-pricing model

Assume that the strike price will be 10% above today's stock value and calculate the price of this option. Provide an explanation that supports your findings.

  What is the equity value of the hmo

What is the equity value of the HMO using the Free Operating Cash Flow (FCOF) method and what impact would this change have on the equity value according to the FOCF method?

  Financial management- the expenditures are irreversible

Most major investment expenditures have two important characteristics which together can dramatically affect the decision to invest

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Should fuelsource recognize a provision

Should FuelSource recognize a provision as of December 31, 20X1, (1) in reporting to itsU.K. parent under IFRSs and (2) in reporting to its U.S.-based lender in accordance withU.S. GAAP?

  Accounting and financial statements

Demonstrate an understanding of governmental and not-for-profit accounting and financial statements. Analyze transactions unique to governmental and not-for-profit entities to determine potential outcomes

  What is the implied coupon

If the promised payment on the bond is the same as the issue price of $100, what is the implied coupon if effective interest rates are 3.0% and the bond has a 1-year maturity?

  What is the new cost of goods sold percent of sales

What is the new cost of goods sold percent of sales for each of the countries and what are your recommendations on choice of country?

  Prepare a balanced scorecard

Explore the need for organisations to calculate and manage performance against objectives, as well as the potential effectiveness of tools such as Balanced Scorecards and Strategy Maps as aids in this cause.

  Evaluate the required monthly mortgage payment

Evaluate the required monthly mortgage payment for Mr. Davidson and construct the 2014~2018 amortization table for Mr. Davidson.

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