User Account

All Pages

What will be the transfer of value

Assignment Help Financial Accounting
Reference no: EM132957980

Question - Consolidated Pasta is currently expected to pay annual dividends of $10 a share in perpetuity on the 1.5 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.)

e. What will be the transfer of value from the old shareholders to the new shareholders? (Enter your answer in millions.)

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

Reference no: EM132957980

Questions Cloud

What amount should be shown in carson balance sheet : Depreciation was computed on the sum-of-the-years'-digits method. What amount should be shown in Carson's balance sheet at December 31, 2018
Training new recruitments in the digital sales : Develop a Training Lesson/Plan that will be conducted to training new recruitments in the digital sales and marketing division
Which is an optional payroll deduction : Which is an optional payroll deduction? The bank charged another company's cheque against our account, this would be included on the bank reconciliation as a(n)
Review the general education competency : The General Education Competencies are derived from the GCU Mission, and are designed to be a guide of general education skills students should gain while atten
What will be the transfer of value : What will be the transfer of value from the old shareholders to the new shareholders? (Enter your answer in millions.)
Agreement instead of relying on the whs legislation : Why might a union have pushed for such a rule for employees covered by the enterprise agreement instead of relying on the WHS legislation?
Prepare the necessary journal entries from transaction date : The bonds pay interest annually on February 1 and mature on February 1, 2024. Prepare the necessary journal entries from transaction date
How much was ending inventory : If $4,000 was the beginning inventory, $10,000 in new inventory purchases were made and the cost of goods sold were $7,000, how much was ending inventory?
What is the balance of the scanning equipment account : Depreciation Expense on this item for the month is $200. What is the balance of the scanning equipment account at the end of the month?

Reviews

Write a Review

Financial Accounting Questions & Answers

  What is the dividend per share that was paid out

What is the dividend per share that was paid out in 2018?An annual dividend of $ $21.9 for 2019 has just been announced by the CEO

  How much is the interest in the accumulated amount

How much is the interest in the accumulated amount of P25,000.00 invested for 3 years at 4% converted quarterly

  Budgeted factory overhead budget

The Roget Factory has determined that its budgeted factory overhead budget for the year is $15,500,000.

  Find what price must a company typically pay to buy

Find What price must a company typically pay to buy another company? The price will? include some discount relative to the current market value of the target's

  Balance sheet as the par value of common stock

In mid- 2014 due to dramatic increases in profits, the stock reached a market value of $90 per share. The board of directors approved a 2- for -1 split. After the stock split, what will the balance sheet show as the par value of common stock?

  Income statement and deriving operating cash flows

Preparation of income statement and deriving operating cash flows and For the month of August, 2006, net cash flows from operating activities for Waldorf were?

  Determine and provide interpretation of the risk

Determine and Provide your interpretation of the risk and return of the equally weighted portfolio compared to those of the individual assets.

  What aspects of the conceptual framework might help

Recently, $20 000 cash was stolen from Fremantle,What aspects of the conceptual framework might help in deciding the appropriate accounting for this situation?

  Determine how can we evaluate the financial performance

Determine How can we evaluate the financial performance of a business using financial statements? Please mention in detail. and give the example

  Increase comfy home accounts payables

Problem: Assume Tenisa and Randolf want to take a $60,000 cash disbursement from Comfy Home's owners' equity before the end of 2017.

  Which probabilities of default will the company be

At which of the following probabilities of default will the company be indifferent between accepting and rejecting a sale on credit grounds?

  Prepare a statement of change in equity for the month

Prepare a statement of change in equity for the month ended in February 28,2017. Assume a loss of $7000 was realized in January.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd