Alphabet (GOOGL) has yet to pay a dividend, but in spring 2018 it announced it would repurchase $8.5 billion worth of shares over the year. (Actually, the exact amount was $8.589,869,056-known as a "perfect" number because it is equal to the sum of its divisors). If the amount spent on share repurchases were expected to grow by 6.6% per year, and Alphabet's equity cost of capital is 7.9%, estimate Alphabet's market capitalization. If Alphabet has 710 million shares outstanding, what stock price does this correspond to? The share price is $ (Round to the nearest cent.) XX

Alphabet (GOOGL) has yet to pay a dividend, but in spring 2018 it announced it would repurchase $8.5 billion worth of shares over the year. (Actually, the exact amount was $8.589,869,056-known as a "perfect" number because it is equal to the sum of its divisors). If the amount spent on share repurchases were expected to grow by 6.6% per year, and Alphabet's equity cost of capital is 7.9%, estimate Alphabet's market capitalization. If Alphabet has 710 million shares outstanding, what stock price does this correspond to? The share price is $ (Round to the nearest cent.) XX

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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JRN Enterprises just announced that it plans to cut its next-year dividend, D₁, from $2.25 to $1.30 per share and use the extra funds to expand its operations. Prior to this announcement, JRN's dividends were expected to grow at 5% per year and JRN's stock was trading at $25.50 per share. With the new expansion, JRN's dividends are expected to grow at 10% per year indefinitely. Assuming that JRN's risk is unchanged by the expansion, the value of a share of JRN after the announcement is closest to: OA. $14.73 OB. $58.84 C. $34.00 D. $25.50
JRN Enterprises just announced that it plans to cut its next-year dividend,D1, from $2.25 to $1.20 per share and use the extra funds to expand its operations. Prior to this announcement, JRN's dividends were expected to grow at 4% per year and JRN's stock was trading at $24.50 per share. With the new expansion, JRN's dividends are expected to grow at 8% per year indefinitely. Assuming that JRN's risk is unchanged by the expansion, the value of a share of JRN after the announcement is closest to?
In mid-2018, some analysts recommended that General Electric (GE) suspend its dividend payments to preserve cash needed for investment. Suppose you expected GE to stop paying dividends for two years before resuming an annual dividend of $1.20 per share, paid 3 years from now, growing by 2.5% per year. If GE's equity cost of capital is 9.5%, estimate the value of GE's shares today. The price today is $ (Round to the nearest cent.)
In mid-2018, some analysts recommended that General Electric (GE) suspend its dividend payments to preserve cash needed for investment. Suppose you expected GE to stop paying dividends for two years before resuming an annual dividend of $1.25 per share, paid 3 years from now, growing by 2.8% per year. If GE's equity cost of capital is 9.4%, estimate the value of GE's shares today.
JRN Enterprises just announced that it plans to cut its dividend from $2.50 to $1.50 per share and use the extra funds to expand its operations. Prior to this announcement, JRN's dividends were expected to grow at 4% per year and JRN's stock was trading at $25.00 per share. With the new expansion, JRN's dividends are expected to grow at 8% per year indefinitely. Assuming that JRN's risk is unchanged by the expansion, the value of a share of JRN after the announcement is closest to:
Is my answer correct? I feel as if I am missing a few steps. AFW Industries has 201 million shares outstanding and expects earnings at the end of this year of $673 million. AFW plans to pay out 61% of its earnings in total, paying 34% as a dividend and using 27% to repurchase shares. If AFW's earnings are expected to grow by 8.9% per year and these payout rates remain constant, determine AFW's share price assuming an equity cost of capital of 12.1%. Formula is g = ROE x b Do the opposite of the formula G = 8.9%; payout is 61% (1 - .61 = .39) 9% - .39 = .89 -.39 = .5
XYZ, Inc. declared on January 1, 2015, that it will pay a cash dividend of $1.00 per share at the end of 2015. Analysts expect that DPS (dividends per share) will grow at a rate of 20% each year for 2016 and 2017, and at 4% a year thereafter. Dividends are paid annually. Shareholders’ required rate of return is 15% per year in 2016 and 2017, and 8% thereafter. What is the share price on January 1, 2015?
Analysts forecast Power Puff to generate $110 million of free cash flow at the end of the current year. (Assume that cash flows occur on December 31 and today is January 1.) Analysts also expect Power Puff's cash flow to grow at 2% in perpetuity. Power Puff has no debt and its shareholders require a return of 11.5%. There are 175 million shares outstanding and the shares trade for $6.62. Power Puff has announced a stock repurchase. It intends to buy shares at a price of $7 per share. The repurchase will be debt financed. Assume that Power Puff is aiming to maintain a debt to value ratio of 40%. The cost of debt is 5.25% and the tax rate is 30%. A) What is the Value of the Levered company? (Select from A, B, C) B) What will the stock price be after the repurchase? (Select from D, E, F) Select 2 correct answer(s) A) $1321 M B) $1240 M C) $1559 M D) $7.15 E) $6.91 F) $6.62
Cooperton Mining just announced it will cut its dividend from $3.88 to $2.59 per share and use the extra funds to expand. Prior to the announcement, Cooperton's dividends wereCX Enterprises has the following expected dividends: $1.03in one year, $1.18 in two years, and $1.25 in three years. After that, its dividends are expected to grow at 4.4% per yearZoom Enterprises expects that one year from now it will pay a total dividend of $5.0 million and repurchase $5.0 millionworth of shares. It plans to spend $10.0 million on dividendsZoom Enterprises expects that one year from now it will pay a total dividend of S5.0 million and repurchase $5.0 million worth of shares. It plans to spend $10.0 million ondividends and repurchases every year after that forever, although it may not always be an even split between dividends and repurchases. If Zoom's equity cost of capital is 13.0% and it has 5.0 million shares outstanding, what is its shareprice today? The price per share is S. (Round to the…
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Analysts expect ElectroSoft to generate $99.65141 million of free cash flow at the end of the current year. (Assume that cash flows occur on December 31 and today is January 1.) Analysts expect Electrosoft's cash flow to grow at 3% in perpetuity. Electrosoft has no debt and its shareholders require a return of 11%. There are 153.78293 million shares outstanding, and the shares trade for $8.10. ElectroSoft has announced a stock repurchase. It intends to buy 36.6 million shares at a price of $9 per share. The repurchase will be debt financed. After the repurchase, the company's debt-to-equity ratio will be 1/3 and it will maintain that ratio in perpetuity. The cost of debt is 5% and the tax rate is 35%. Answer the following questions. Part 1 What is the levered cost of equity after the repurchase? (Express your answer in percentage form rounded to one decimal place.) Cost of equity= Part 2 What is the company's WACC after the repurchase? (Express your answer in percentage form rounded to…

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