Company B will pay a dividend of $3 Billion at the end of year 1 and a dividend of $4 Billion at the end of year 2. After year 2, the dividend will increase at a rate of 1% indefinitely. Assume a cost of equity of 10%. What is the value of Company B? $48 Billion $57 Billion
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- Credenza Industries is expected to pay a dividend of $1.50 at the end of the coming year. It is expected to sell for $61 at the end of the year. If its equity cost of capital is 9%, what is the expected capital gain from the sale of this stock at the end of the coming year? .... O A. $57.34 O B. $5.04 OC. $55.96 O D. $3.66 ..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…Company R has paid most recent dividend as $2.55. The dividend will be paid by the company forever and the dividend will grow at 6.00% forever. The required rate of return is 10%. What will be the current stock price? a. $63.750 b. $67.575 c. $65.125 d. $67.255
- Assume that B Corp. net income for next year would be 500 million and its optimal capital budget for next year is 250 million. Also assume that the debt ratio is now 80%. What would be the maximum capital spending if B Corp decides to retain all of its earnings? A) $250 m B) $2,500m C) $4,500 m D) $450 E) $5.500 m OA OB OC OD OEA company is expected to pay out 40% of its expected earnings per share of €0.5 next year as dividends. The earnings are expected to grow 2% per year in perpetuity and the cost of equity is 7%. Supposing that the company is a stable growth dividend paying, calculate the expected PE ratio. P/E=Payout ratio*(1+g)/(r-g) A. 4 B. 8 C. 10 D. 20 E. 25Gillette Corporation will pay an annual dividend of $ 0.63 one year from now. Analysts expect this dividend to grow at 1 1.1 % per year thereafter until the 6th year. Thereafter, growth will level off at 1.6 % per year. According to the dividend- discount model, what is the value of a Gillette share if the firm's equity cost of capital is 8.4 %? Question content area bottom Part 1 The value of a Gillette share is $ enter your response here. (Round to the nearest cent.)
- Suppose the Earnings Multiple of the comparable firms is 10.5 and the next year projected net income of Firm X is $990 million, what is the terminal value for Firm X based on the earnings multiple approach? O a. $9812 O b. $10395 O c. $12945 O d. $12815You are given the following information for a firm: EBIT x (1-T) this period Depreciation Net Working Capital Increase Asset Beta Capital Expenditures Growth Rate of FCF Risk Free Rate = = $17 million $2.4 million $0 1.1 $3.7 million 9% 3% Market Risk Premium Using the above data, what is the present value of all FCF? Don't forget that in applying the growing perpetuity formula, you have to use not this year's FCF, but next period's FCF (multiply this period's FCF by (1 + growth rate of FCF). 6.3% Your answer should be in $millions. For example, if your answer is $7.34 million, then enter 7.34 in the answer box.Gordon Growth Company is expected to pay a dividend of $4 next period and dividends are expected to grow at 6% per year. The required return is 16%. What is the price expected to be in year 4? Answer a. $41.6 b. $50.50 c. $40 d. $10
- Additional information 1) Sales for the year ended 31 December 2021 are expected to total R7 200 000, an increase of R800 000 over the previous year ended 31 December 2020. A profit margin (net profit margin) of 10% is expected. 2) A final dividend of 80 cents per share is expected to be recommended on 31 December 2021. These dividends will be paid during 2022. 3) Cash and cash equivalents and Ordinary share capital are expected to remain unchanged. 4) Trade and other receivables represent approximately 20% of the annual sales. 5) The company’s closing inventory will change directly with changes in sales for the financial year ended 31 December 2021. 6) An old machine (Cost price R400 000; Accumulated depreciation R360 000) is expected to be sold at carrying value on 31 December 2021 and a new machine with a cost price of R500 000 will be purchased on the same date to replace it. Total depreciation for the year ended 31 December 2021 is estimated at R240 000. 7) Trade…If NUBD Co. requires a minimum return on its investments of 15%, what is their residual income? A. P1,250,000 B. P4,500,000 C. P6,750,000 D. P750,000If the last dividend paid by Chemical Brothers Inc. was $1.25 and analysts expect these payments to increase 4% per year, what will the stock price be next year if the required return is 15%? Select one: O a. $12.29 O b. $11.82 O c. $31.25 O d. $12.78 O e. $23.11