What share price would you expect after the announcement

Assignment Help Finance Basics

Reference no: EM131962666

Question: Cooperton Mining just announced it will cut its dividend from $4.32 to $2.22 per share and use the extra funds to expand. Prior to the announcement, Cooperton's dividends were expected to grow at a 2.9% rate, and its share price was $51.77. With the new expansion, Cooperton's dividends are expected to grow at a 4.9% rate. (Assume Cooperton's risk is unchanged by the new expansion.)

a) What share price would you expect after the announcement?

b) The equity cost of capital is %. (Round to two decimal places.)

c) Is the expansion a positive NPV investment?

Reference no: EM131962666

Questions Cloud

What will be the change in the percentage : A corporate bond with a 6.7 percent coupon has 13 years left to maturity. It has had a credit rating of BBB and a yield to maturity of 7.4 percent.

Compute the yield to maturity for the bond : A corporate bond with a face value of $1,000 matures in 4 years and has a 8% coupon paid at the end of each year. The current price of the bond is $932.

Equations of value : Equations of Value-Tonya agrees to pay an amount of 3X at the end of 4 years and an amount of X at the end of 9 years.

What is return on assets : TJ’s has annual sales of $813,200, total debt of $176,000, total equity of $395,000, and a profit margin of 4.63 percent. What is the return on assets?

What share price would you expect after the announcement : Cooperton Mining just announced it will cut its dividend from $4.32 to $2.22 per share and use the extra funds to expand. Prior to the announcement.

Determine how many months will company take : Cooling Tools, Inc. is currently producing 943 of small refrigerators per month but the company's CEO plans to increase production at a rate of 7.85 percent.

How large is the risk premium : Suppose you have a 6% coupon bond that matures in 2 years from now. The principal is 1,000. The bond currently trades at 930.58.

What is convenience yield on copper : Copper spot price is $3.50 a pound. The cost of carry for copper is 3.2% and the current risk-free rate is 2.2%, both rates are per annum with continuous.

What is your after-tax yield on the bond : A corporate bond pays 8.5 percent yield to maturity. You are in the 27 percent tax bracket. What is your after-tax yield on this bond?

User Account

All Pages