ABC Co. reinvests 40% of its earnings to its own operations and has current dividends yield of 20%. If its EPS is P20, how much would be its initial public offering per share? A. P40 C. P100 E. answer not given B. P60 D. insufficient data

ABC Co. reinvests 40% of its earnings to its own operations and has current dividends yield of 20%. If its EPS is P20, how much would be its initial public offering per share? A. P40 C. P100 E. answer not given B. P60 D. insufficient data

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter15: Distributions To Shareholders: Dividends And Repurchases

Section: Chapter Questions

Problem 6MC: Suppose IWT has decided to distribute $50 million, which it presently is holding in liquid...

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Why do you deduct or subtract 1 to flotation cost? Example: Given; Annual dividend (D) = $4.75 Flotation cost (F) = 0.05 or 5% Number of shares issued (N) = 10,000 Stock price (P0) = $50 Formula; Total value able to receive = N * P0 * (1 - F) Total value able to receive = 10,000 * $50 * (1 - 0.05) Total value able to receive = $500,000 * 0.95 Total value able to receive = $475,000
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