A company just paid a dividend of € 1 per share. If the dividend is expected to increase at a steady rate of 10% per year, calculate the value of thecompany's share if the required return is 25%.O a. €6.67O b.€11.25O c.€5.22O d.€7.33O e. None of the given answers is correct.

Value of share is calculated by the expected dividend in next period with the required return net of…

Answered: A company just paid a dividend of € 1…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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b. Now assume that TTC's period of supernormal growth is to last for 5 years rather than 2 years. How would this affect its price, dividend, yield, and capital gains yield? 1. Find the price today. D₂ 2 2 Year Dividend PV of dividends $1.7455 $1.9041 $2.0772 $2.2661 $2.4721 $1.60 10.0% $59.5547+ $70.0197 - P Dividend yield- Dividend yield- Dividend yield $1.60 Part 2. Finding the expected dividend yield. Dividend yield- Dividend yield- Dividend yield- D₁ $1.920 2.74% Short-run g; for Years 1-5 only. Long-run g; for Year 6 and all following years. 10.0% 7.26% $1.92 Part 3. Finding the expected capital gains yield. Cap. Gain yield-Expected return Cap. Gain yield Cap. Gain yield- Cap. Gain yield Expected return Cap. Gain yield Cap. Gain yield 1 $2.30 " 1 P₁ $70.020 105.5048 Terminal value = Ps= Dividend yield 2.74% 3 $2.76 P. 4 $3.32 Dividend yield 5 $3.98 4.2202 c. What will be TTC's dividend yield and capital gains yield once its period of supernormal growth ends? We used the 5 year…
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Solve it using formulas, no tables correct anwer is P= £301.47
Cc. 205
A company will produce $3.00 in earnings per share at the end of the year. Reinvested earnings can produce a 14% return on equity. What is the PVGO if the company decides on a 30.0% plowback policy? Assume that investors have a 9.0% required rate of return. a. $10.42 b. $12.56 c. $13.86 d. $15.56
Read the scenario below and answer the questions that follow. A company is under pressure from influential shareholders to change its dividend policy. The company has always followed the residual dividend policy, but the influential shareholders feel that the company needs to change to a stable pay-out ratio policy. The company just reported earnings of R232m for the year ended 31 March 2024. The company is considering the following investment opportunities for the upcoming financial year: Investment opportunity A BUD C E Cost R72m R62m R110m R96m R48m Internal rate of return 14.28% 13.03% 15.67% 16.01% 13.79% The company's cost of capital is 13.5% and its target capital structure is represented by a debt-to-assets ratio of 40%. The company has 28m ordinary shares outstanding.
Tinsley, Incorporated, wishes to maintain a growth rate of 17 percent per year and a debt-equity ratio of 1.1. The profit margin is 4.4 percent, and total asset turnover is constant at 1.04. What is the dividend payout ratio? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. What is the maximum sustainable growth rate for this company? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
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Holt Enterprises recently paid a dividend, D0, of $1.75. It expects to have nonconstant growth of 18% for 2 years followed by a constant rate of 8% thereafter. The firm's required return is 18%. What is the firm's horizon, or continuing, value? Do not round intermediate calculations. Round your answer to the nearest cent. $ What is the firm's intrinsic value today, ? Do not round intermediate calculations. Round your answer to the nearest cent.
Tinsley, Incorporated, wishes to maintain a growth rate of 17.75 percent per year and a debt-equity ratio of 1.25. The profit margin is 4.1 percent, and total asset turnover is constant at 1.01. a. What is the dividend payout ratio? Note: A negative answer should be Indicated by a minus sign. Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. What is the maximum sustainable growth rate for this company? Note: Do not round Intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Dividend payout ratio b. Sustainable growth rate % %

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A company just paid a dividend of € 1 per share. If the dividend is expected to increase at a steady rate of 10% per year, calculate the value of the company's share if the required return is 25%. O a. €6.67 0 b. €11.25 O c. €5.22 O d. €7.33 Oe. None of the given answers is correct.