Calculate earnings and dividends growth rates for the two companies below with the following information: Kennedy Strasburg Earnings per share 2010
Robert pang, a 53- year- old software engineer, and his wife, Jean, have $50,000 to invest. they will need the money at retirement 10 years. They are considering 2 investments. The first is a utility company common stock that cost $50 per share and pays dividends of $2 per share per year (a 4% dividend yield). Note that these di
A corporation has 100,000 shares of 7 percent cumulative preferred stock and 40,000 shares of common stock outstanding.Par value for each is $10. no dividends were paid last year, but this year a $150,000 dividend is paid. a) how much of this $150,000 goes to the holders of preferred stock? b)Assume the same facts as in Qu
An investment banker pays $23.50 per share for 3,000,000 shares of the KDO company. It then sells these shares to the public for $25. How much money does KDO receive? What is the investment banker's profit? What is the stock price of KDO?
Chill Out Corporation's next annual dividend is expected to be $1.06 per share. Dividends and earnings have been growing at 6% a year and you expect this growth rate to continue indefinitely. If your required rate of return for this stock is 14%, what is the maximum price you should be willing to pay for it? a. $7.57 b.
Philagen Inc., ended 2012 with net profit before taxes of $211,000.00. The company is subject to a 40% tax rate and must pay $30, 600.00 in preferred stock dividends before distributing any earning on the $80,000.00 shares of common stock currently outstanding. If the firm paid common stock dividend of .82 per share, how man
Owns 100 shares of AB Corporation stock, which was purchased three years ago for $5,000. Sells all 100 shares on December 27, of the current year, for $4,000 and on January 5, of the following year, purchases 60 shares of AB Corporation stock. Recognized loss will be?
The preferred stock of Nadine Fashions pays an annual dividend of $2.3 a share and sells for $45 a share. The tax rate is 34 percent. What is the firm's cost of preferred stock? 2.73 percent 5.93 percent 5.11 percent 4.56 percent 6.12 The common stock of Pittsburgh Steel Products has a beta of 1.52 and a sta
A firm issued a preferred stock which matures in 30 years and carries a maturity value of $45. The dividend is $4 per year over the 30 year period. The current market discount rate for this stock is 8%. What is the value of the preferred share?
Preferred stock is a hybrid security that is an equity holding but behaves more like a bond, as far as stock price movements. Preferred stock has no voting rights, and in the event of bankruptcy, preferred shareholder claims follow bondholders and precede common shareholders. Preferred dividends are contractual, in that while
Lab X is a profitable firm that is not paying a dividend on its common stock. Jim, an analyst for Invest Today, believes that Lab X will begin paying a $2.00 per share dividend in two years and that the dividend will increase 5% thereafter. Bob, one of Jim's colleagues at the firm, is less optimistic. Bob thinks that Lab
J. Jones Investment Bankers will use a combined earnings and dividend model to determine the value of the Allen Corporation. Estimate earnings per share for the next five years are: 2008 - $3.20 2009 - 3.60 2010 - 4.10 2011 - 4.62 2012 - 5.20 a. If 40% of earnings are paid out in dividends and the discount rat
Hart Enterprises recently paid a dividend, of $1.25. It expects to have nonconstant growth of 20% for 2 years followed by a constant rate of 5% thereafter. The firm's required return is 10%. A. How far away is the terminal, or horizon, date? B. What is the firm's horizon, or terminal, value? C. What is the firm's intrinsic value today?
Hart Enterprises recently paid a dividend, of $1.25. It expects to have nonconstant growth of 20% for 2 years followed by a constant rate of 5% thereafter. The firm's required return is 10%. A. How far away is the terminal, or horizon, date? B. What is the firm's horizon, or terminal, value? C. What is the firm's
A company expects to grow its dividend by 2% each year, forever. The expected dividend in year 1 is $2.00. Investors require a 6% rate of return on this stock. What is the stock price today? $25.66 $36.23 $50.00 $22.96 $47.02 $19.27
The Johnston Company will pay an annual dividend of $1.25 next year. The company has increased its dividend by 3.45 percent a year for the past twenty years and expects to continue doing so. What will a share of this stock be worth 13 years from now if the required return is 11 percent?
(Dividend adjustment model) Last year's dividend for Woolridge Outfitters was $1.00. This year's earnings per share are $4.00, and Woolridge's target payout ratio is 40%. Using the dividend adjustment model, Equation (18.1), what would be this year's dividend with each of the following adjustment factors? a. 70% b. 0% c. 100%
Dollar, Inc. wants to offer preferred stock for sale at a price of $25 a share. The company wants its investors to earn an 8.25 percent rate of return. What is the minimum annual dividend the firm will need to pay per share? Answer $2.06 $3.73 $4.15 $4.90 $1.72
Relatively recent revisions to the Code have modified the tax treatment of dividends. Put your Internet research skills to use explain these changes and their consequences. In particular, (1) what dividends are as defined by the Code; (2) what the recent changes effectively do (and how it was different from the prior app
Discuss other information pertinent to Starbucks that could affect its future performance and stock price. This could include its dividend policy, its capital structure, bond ratings, experts opinions, new projects, litigation, etc.
Last year's dividend for Woolridge Outfitters was $1.00. This year's earnings per share are $4.00, and Woolridge's payout ratio is 40%. Using the dividend adjustment model shown below, what would be this year's dividend with each of the following adjustment factors? a. 70% b. 0% c. 100% dividend adjustment model
Please help with the following problem. 3M pays quarterly cash dividends on its common stock. Suppose 3M forecasts earnings per share of $4.00 this year and $3.80, $3.20, $4.80,and $4.08 over the following four years, respectively, and believes it can maintain a long-term payout ratio of 1/4. 3M revises its dividends once
1. Norman's Cabinet, Inc., had net income of $424,800 for its fiscal year ended October 31, 2009. During the year, the company had outstanding 53,000 shares of 9 percent $60 par value preferred stock, and 18,480 shares of common stock. 2 The balance sheet caption for common stock is: Common stock, no par value, 7,000,000
Martinez Company's ledger shows the following balances on December 31, 2010. 5% Preferred Stock - $10 par value, outstanding 20,000 shares $200,000 Common Stock - $100 par value, outstanding 30,000 shares $3,000,000 Retained Earnings
ABC Ltd, a public company intends to redeem 100000 $1 redeemable shares at $1.5each. the shares were originally issued at a premium of $0.3 per share. To finance the redemption, 80000 new $1 shares are issued at par at the same time. ABC Ltd also plans to reissue the 100,000 shares which have just been redeemed to the public at
The dividend growth is commonly expressed by the retention growth equation g = ROE x Retention Ratio. Recall that the retention ratio is the plowback or earnings retention, and is sometimes written as (1- Dividend Payout Ratio). In 2008 the MKA Corporation reports EPS of $5.75, ROE equals 15% and the company has a dividend p
1. Nonconstant Growth. Planned Obsolescence has a product that will be in vogue for 3 years, at which point the firm will close up shop and liquidate the assets. As a result, forecast dividends are DIV1 = $2, DIV2 = $2.50, and DIV3 = $18. What is the stock price if the discount rate is 12%? 2. Dividend Growth. Grandiose Growt
Dividends are said to be the basis for the value of stocks. If that's true, how do we explain the fact that companies that pay no dividends often have substantial market value? (Such companies are usually relatively young and in high growth fields.) First explain the phenomenon in terms of the individual valuation model (
Dividends have been in the news often due to the fact that government would provide tax benefits to dividend paying companies. Technology companies typically pay low or no dividends since they reinvest cash flows in research and development to fund future growth. However, as many technology companies mature (e.g. Microsoft, Dell
(Choosing financial targets) Bixton Company's new chief financial officer is evaluating Bixton's capital structure. She is concerned that the firm might be underleveraged, even though the firm has larger-than-average research and development and foreign tax credits when compared to other firms in its industry. Her staff prepared
From an accounting perspective, why would a company split its shares? What are the advantages and disadvantages? How would you report the split?
Assume all firms have the same expected dividends. If they have different expected returns, how will their market values and expected returns be related? What about the relation between their dividends yields and expected returns?