What is the share price and dividend in year six

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1. Tubby Toys estimates that its new line of rubber ducks will generate sales of $6.70 million, operating costs of $3.70 million, and a depreciation expense of $0.70 million. If the tax rate is 40%, what is the firm’s operating cash flow?

2. Capitol Carriers just paid a dividend of $0.65 per share (think yesterday). The dividend is set to grow 11 percent for the next five years and at 7 percent after that. The expected return is 17 percent.

(a) What is the current share price (P0)?

(b) What is the share price and dividend in year six (P6, D6)?

Reference no: EM132036575

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