Cascade Mining Company expects its earnings and dividends to increase by 7% per year over the next six years and then to remain relatively constant thereafter. The firm currently (as of year 0) pays a dividend of $5 per share. Determine the value of a share of Cascade stock to an investor with a 12% required rate of return.
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According to the dividend valuation model, when the required rate of return is 10%, the constant growth rate of dividends is 4%, and the dividends at the end of the first year is $6, then the current price of the stock must be ____? The price of a stock is $50 today, dividend at the end of the first year is $1, the constant g
Rite Bite Enterprises historically has not been a dividend paying company but in its latest board meeting the company decided to start paying a fixed dividend of $1.5 for the next year. After the first dividend, they expect that the dividend will grow at 5% over the following three years and it will maintain a constant 6% annual
Dividend Policy 1. Here are several assertions about typical corporate dividend policies. Which of them are true? Write out a corrected version of any false statements. mark answer with an x- write a correct statement for false items below chart a. Most companies set a target dividend payout ratio. b. They set
Lester Corp. manufactures mountain bikes and distributes them through retail outlets in Oregon and Washington. Lester Corp. has declared the following annual dividends over a six-year period: 2002, $40,000; 2003, $18,000; 2004, $24,000; 2005, $27,000; 2006, $65,000; and 2007, $54,000. During the entire period, the outstanding st
Stocks and Dividends. See attached file for full problem description. Question 4 . Multiple choice 1. Troy Corporation reports at the end of 2004. Net Income for 2004 $120,000 Authorized # of shares 60,000; Issued # of shares 40,000; Shares in treasury 10,000 It s earnings per share for 2004 is: (a) $2
The common equity section of Daizy Company balance sheet shows Common stock (80,000,000 shares @ 5 par value) $400,000,000 Additional paid in capital $1,200,000,000 Retained Earnings
What are the different types of dividends that corporations may issue? When should a corporation pay dividends? Would you prefer a stock dividend or a cash dividend? Why?
Compare TEC shares against the market portfolio using both standard deviation and beta as risk measure. What are you conclusion? Explain your answer. TEC Market Portfolio Expected Return 15%
5) You are considering two stocks. Both pay a dividend of $1, but the beta coefficient of A is 1.5, while the beta coefficient of B is 0.7. Your required return is k=8%+(15%-8%)B a) What is the required return for each stock? b) If A is selling for $10 a share, is it a good buy if you expect earnings and dividends to gro
The expected rate of return on the common stock of NW Corp. is 14 percent. The stock's dividend is expected to grow at a constant rate of 8 percent a year. The stock currently sells for $50 a share. Which of the following statement is most correct? f. the stocks dividend yield is 8% g. the stocks dividend yield is 7% h. the
Eastern Telecom is trying to decide whether to increase its cash dividend immediately or use the funds to increase its future growth rate. It will use the dividend valuation model. P=d/k-g P= Price of the stock today D1= Dividend at end of the first year D x (1 x g) D0= Dividend today K= Required rate of retu
Two investors are evaluating GE's stock for possible purchase. They agree on the expected value of D1 and also on the expected future dividend growth rate. Further, they agree on the riskiness of the stock. However, one investor normally holds stocks for 2 years, while the other holds stocks for 10 years. On the basis of the type of analysis done in this chapter, should they both be willing to pay the same price for GE's stock?
1. Rates of return and equilibrium - Stock C's beta coefficient is bc = 0.4, while Stock D's is bd = -0.5. (Stock D's beta is negative, indicating that its return rises when returns on most other stocks fall. There are very few negative beta stocks, although collection agency stocks are sometimes cited as an example.) a. If
On July 1, 2004, Marco purchased an option to buy 1,000 shares of Surfing, Inc. at $40 per share. He purchased the option for $3,000.
On July 1, 2004, Marco purchased an option to buy 1,000 shares of Surfing, Inc. at $40 per share. He purchased the option for $3,000. It was to remain in effect for five months. The market experienced a decline during the latter part of the year, so Marco decided to let the option lapse as of December 1, 2004. On his 2004 in
Dividends and Stockholders' Equity Section E15-18 (Dividends and Stockholders' Equity Section) Anne Cleves Company reported the following amounts in the stockholders' equity section of its December 31, 2006, balance sheet.
(Dividends and Stockholders' Equity Section) Anne Cleves Company reported the following amounts in the stockholders' equity section of its December 31, 2006, balance sheet. Preferred stock, 10%, $100 par (10,000 shares authorized, 2,000 shares issued) $200,000 Common stock, $5 par (100,000 shares
Through careful accumulation of stocks, you are expecting to receive a dividend payment totaling $250 in two years. (That is one payment in two years). At a market rate of 4 %, what is the dividend payment worth to you today?
A firm's stock has a required return of 10%. The stock's dividend yield is 6%. What dividend did the firm just pay if the current stock price is $40?
P15-4 (Stock Transactions?Assessment and Lump Sum) Shikai Corporation's charter authorized issuance of 100,000 shares of $10 par value common stock and 50,000 shares of $50 preferred stock. The following transactions involving the issuance of shares of stock were completed. Each transaction is independent of the others. 1. Is
The Rosewell Co. has had 5,000 shares of 9%, $100 par-value preferred stock and 10,000 shares of $10 par-value common stock for the last two years. During the most recent year , dividends paid totaled $65,000; in the prior year, dividends paid totaled $40,000. Compute the amount of dividends that must have been paid to prefer
Compute the amount of dividends that must have been paid to preferred stockholders and common stockholders in each of the three years given the following four independent assumptions:
The ABC Company has had 10,000 shares of 10%, $100 par-valued preferred stock and 80,000 shares of $5 stated-value common stock outstanding for the last three years. During that period, dividends paid totalled $0, $200,000, and $220,000 for each year respectively. Compute the amount of dividends that must have been paid to pr
a) Axel Telecommunications has a target capital structure that consists of 70% debt and 30% equity. The company anticipates that its capital budget for the upcoming year will be $3,000,000. If Axel reports net income of $2,000,000 and it follows a residual distribution model with all distributions as dividends, what will be it
Problem #1 Present Value: Jack Hammer invests in a stock that will pay dividends of $2.00 at the end of the first year; $2.20 at the end of the second year; and $2.40 at the end of the third year. Also, he believes that at the end of the third year he will be able to sell the stock for $33. What is the present value of all futu
A share of common stock has an expected long-run constant growth rate of 10 percent and is currently priced at $66 per share. If investors require a 15 percent rate of return, then what was the last dividend paid on the stock? Po = Dn (1 +Gc) __________ Ke - Gc $66 = D1 (1 + .10) _____________
The stockholder's equity section of Peter Corporation's balance sheet at December 31, 2005 was as follows: Common stock ($10 par value); authorized 1,000,000 Shares, issued and outstanding 900,000 shares $9,000,000 Additional paid-in capital 2,700,000 Retained earnings 1,300,000 Total stockholders' equity
(See attached files for full problem description) Sunny day stores operate convenience store throughout much of the United States. The industry is highly competitive, with low profit margins. The company's competition includes national, regional, and local supermarkets; oil companies; and convenience store operators. A foo
Integrated Potato Chips paid a $1 per share dividend yesterday. You expect the dividend to grow steadily at a rate of 4 percent year. A. What is the expected dividend in each of the next three years? B. If the discount rate for the stock is 12 percent, at what price will the stock sell? C. What is the expected stock
The Berenek Company, whose stock price is now $25, needs to raise $20 million in common stock. Underwritters have informed the firms management that they must price the new issue to the public at $22 per share because of signaling effects. The underwritters compensation will be 5% of the issue price so B
A firm has 80 million shares on issue. Investors expect its end of year share price to be $3.90 and that it will pay a $0.25 dividend at the end of the year. The capitalisation rate which investors apply to the firm is 10%. There are no taxes or imperfections. a. If the company has an operating cash flow during the year
Will the following have high, medium or low dividend payout ratios, and why? a) company with high business risk b) a company that goes through an unexpected drop in earnings from an upward sloping trend line. c) a firm with ordinary growth, alot of borrowing capacity and high liquidity.