Worth per share to make the two offers equally attractive

Assignment Help Financial Management

Reference no: EM13934560

A business executive is offered a management job at Generous Electric Company, which offers him a 5 year contract that calls for a salary of $62,000 per year, plus 600 shares of GE stock at the end of the 5 years. This executive is currently employed by Fearless Bus Company, which also has offered him a 5 year contract. It calls for a salary of $65,000, plus 100 shares of Fearless stock each year. The Fearless stock is currently worth $60 per share and pays an annual dividend of $2 per share. Assume end of year payments of salary and stock. Stock dividends begin on year after the stock is received. The executive believes that the value of the stock and the dividend will remain constant. If the executive considers 9% a suitable rate of return in this situation, what must the Generous Electric stock be worth per share to make the two offers equally attractive? Use the future worth analysis method in your comparison

Reference no: EM13934560

Questions Cloud

Three methods for developing probability estimates : Three methods for developing probability estimates (not decision models) were discussedin "Capital Budgeting and Long-Term Financing Decisions, 4th Edition", what are they and which of these is most common in practice?

Company a allocates manufacturing overhead to jobs : Explain why, in spite of the fact that the companies are very similar.

Acquaint with the financial markets products and services : After getting acquaint with the financial markets products and services, Celestila Moonn, an Global Affairs major student, decided to invest in mutual funds and hedge funds; Briefly discuss should Moonn make her investment decision based on her advis..

Online global financial markets course : Celestila Moonn, an Global Affairs major student registered for the online Global Financial Markets course. After completing the reading of “An overview of the Global Financial Markets” Moonn stated the following regarding the trends in the growth of..

Worth per share to make the two offers equally attractive : A business executive is offered a management job at Generous Electric Company, which offers him a 5 year contract that calls for a salary of $62,000 per year, plus 600 shares of GE stock at the end of the 5 years. what must the Generous Electric stoc..

Prepare a detailed teaching plan for breast tumour : You will need to prepare a detailed teaching plan, covering the below suggested content for patient education, including a small discussion on normal anatomy and physiology of the breast and axilla lymph glands - see marking guide.

What is the problem being addressed by your research study : What is the problem being addressed by your research study? State the refined research question and hypothesis (null and alternative). What are your independent and dependent variables? What are their operational definitions

What are the various strategies used to regulate glycolysis : What are the various strategies used to regulate glycolysis (do not include glycogen phosphorylase in this question), but include how various inhibitors and activators function, how a highly endergonic reaction is facilitated, and what the roles o..

Display full details of all attributes in the author table : Display full details of all the attributes in the AUTHOR table. Display the last name and first name for all the authors in the AUTHOR table and sort all records by last name order ascending.

User Account

All Pages