Baker Island Tours (BIT) expects to grow at a constant rate of 4 percent forever. Its target debt/assets ratio is 40 percent, and it expects to have profitable investments of $1.3 million this year. BIT plans to continue paying the same dividend that has been paid the past 10 years, $2.25 per share, long into the future. The firm has 500,000 shares of stock outstanding. If net income is expected to be $2 million, what should be BIT's dividend payout ratio this year?
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What should be BIT's dividend payout ratio this year on these financial accounting question?
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- What should be cre s dividend payout ratio this year ??Derry Corporation is expected to have an EBIT of $21 million next year. Increases in depreciation, the increase in net working capital, and capital spending are expected to be $165,000, $80,000, and $120,000, respectively. All are expected to grow at 18 percent per year for four years. The company currently has $10.4 million in debt and 750,000 shares outstanding. You believe that in Year 5 sales will be $23.7 million and the appropriate price-sales ratio is 2.9. The company's WACC is 8.5 percent and the tax rate is 21 percent. What is the price per share of the company's stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Share priceFull Boat Manufacturing has projected sales of $124.5 million next year. Costs are expected to be $74.4 million and net investment is expected to be $15.05 million. Each of these values is expected to grow at 14 percent the following year, with the growth rate declining by 2 percent per year until the growth rate reaches 6 percent, where it is expected to remain indefinitely. There are 6.6 million shares of stock outstanding and investors require a return of 13 percent return on the company’s stock. The corporate tax rate is 24 percent. a. What is your estimate of the current stock price? b. Suppose instead that you estimate the terminal value of the company using a PE multiple. The industry PE multiple is 11. What is your new estimate of the company’s stock price?
- The stock of Nogro Corporation is currently selling for $10 per share. Earnings per share in the coming year are expected to be $2. The company has a policy of paying out 50% of its earnings each year in dividends. The rest is retained and invested in projects that earn a 20% rate of return per year. This situation is expected to continue indefinitely. a. Assuming the current market price of the stock reflects its intrinsic value as computed using the constant-growth DDM, what rate of return do Nogro’s investors require?b. By how much does its value exceed what it would be if all earnings were paid as dividends and nothing were reinvested?c. If Nogro were to cut its dividend payout ratio to 25%, what would happen to its stock price?d. What if Nogro eliminated the dividend?The stock of Nogro Corporation is currently selling for $16 per share. Earnings per share in the coming year are expected to be $4 The company has a policy of paying out 40% of its earnings each year in dividends. The rest es retained and invested in projects that earn a 25% rate of return per year. This situation is expected to continue indefinitely Required: a. Assuming the current market price of the stock reflects its intrinsic value as computed using the constant-growth DDM, what rate of return do Nogro's investors require? (Do not round intermediate calculations.) Rate of retur Return to question Answer is complete and correct. 250% b. By how much does its value exceed what it would be if all earnings were paid as dividends and nothing was reinvested?Ted Corporation expects to generate free - cash flows of $200,000 per year for the next five years. Beyond that time, free cash flows are expected to grow at a constant rate of 5 percent per year forever. If the firm's weighted average cost of capital is 15 percent, the market value of the firm's debt is $500,000, and Ted has a half million shares of stock outstanding, what is the value of Ted stock?.
- Universal Exports is expected to pay the following dividends over the next four years: $8, $4, $2, and $2. Afterwards the company is expected to maintain a constant 4 percent growth rate in dividends. If the required return is 15 percent, what is the maximum that you would be willing to pay for a stock of Universal today?An analyst is trying to estimate the intrinsic value of the stock of ATR Kim Eng. The analyst estimates that ATR Kim Eng’s free cash flow during the next year will be P25 million. The analyst also estimates that the company’s free cash flow will increase at a constant rate of 7% a year and that the company’s WACC is 10%. ATR Kim Eng has P200 million of long-term debt and preferred stock and 30 million outstanding shares of common stock. In the Philippine stock exchange, ATR Kim Eng's common stock is traded at P30.00. What can be said of the stock price's condition? a. undervalued/underpriced b. overvalued/overpriced c. oversold d. in equillibrium= Halliford Corporation expects to have earnings this coming year of $2.71 per share. Halliford plans to retain all of its earnings for the next two years. Then, for the subsequent two years, the firm will retain 52% of its earnings. It will retain 22% of its earnings from that point onward. Each year, retained earnings will be invested in new projects with an expected return of 19.8% per year. Any earnings that are not retained will be paid out as dividends. Assume Halliford's share count remains constant and all earnings growth comes from the investment of retained earnings. If Halliford's equity cost of capital is 11.4%, what price would you estimate for Halliford stock? The stock price will be $ (Round to the nearest cent.)
- The stock of Nogro Corporation is currently selling for $28 per share. Earnings per share in the coming year are expected to be $7.00. The company has a policy of paying out 50% of its earnings each year in dividends. The rest is retained and invested in projects that earn a 25% rate of return per year. This situation is expected to continue indefinitely. Required: Assuming the current market price of the stock reflects its intrinsic value as computed using the constant-growth DDM, what rate of return do Nogro’s investors require? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. By how much does its value exceed what it would be if all earnings were paid as dividends and nothing were reinvested? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. If Nogro were to cut its dividend payout ratio to 25%, what would happen to its stock price? Note: Round your answer to 2 decimal places. What would happen to its…You have gathered the following information about Firm D: the current earnings per share for the year are £0.25, and the company has just paid out 18% of the earnings as cash dividend to shareholders. The investors require a minimum equity return of 12.25%. You project that Firm D will retain 70% of its earnings for the next two years. For the subsequent two years, the firm plans on retaining 50% of its earnings. The dividend payout ratio will then increase to 60% in the following year. From that point forward it will retain only 10% of its earnings. The earnings growth rate is 21% until the end of year 4, and 15% for the subsequent two years. For the period thereafter the earnings and dividend growth rate will slow to a long term rate of 4.5%. Calculate the fair value of the company's shares using the dividend discount model.The stock of Nogro Corporation is currently selling for $29 per share. Earnings per share in the coming year are expected to be $3.90. The company has a policy of paying out 50% of its earnings each year in dividends. The rest is retained and invested in projects that earn a 21% rate of return per year. This situation is expected to continue indefinitely. a. Assuming the current market price of the stock reflects its intrinsic value as computed using the constant-growth DDM, what rate of return do Nogro's investors require (round to 2 decimal places)? Rate of Return ?% b. By how much does its value exceed what it would be if all earnings were paid as dividends and nothing were reinvested (round to 2 decimal places)? PVGO $?