Please correct answer and don't use hand raiting Company Q's current return on equity (ROE) is 13%. It pays out 45 percent of earnings as cash dividends (payout ratio = 0.45). Currentbook value per share is $63. Book value per share will grow as Q reinvests earnings.Assume that the ROE and payout ratio stay constant for the next four years. After that, competition forces ROE down to 11.0% and thepayout ratio increases to 0.75. The cost of equity is 11.0%.a. What are Q's EPS and dividends in years 1, 2, 3, 4, and 5?b. What is Q's stock worth per share?Complete this question by entering your answers in the tabs below.Required ARequired BWhat are Q's EPS and dividends in years 1, 2, 3, 4, and 5?Note: Do not round intermediate calculations. Round your answers to 2 decimal places.YearEPSDividends1$7.83 $3.522$8.87 $3.993$9.98 $4.494$11.30 $5.095< Required ARequired B >

Initial Calculation for Year 1:Calculate the Earnings Per Share (EPS) by multiplying the Return on…

Answered: Company Q's current return on equity…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 15P

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Company Q's current return on equity (ROE) is 20%. It pays out 45 percent of earnings as cash dividends (payout ratio 0.45). Current book value per share is $56. Book value per share will grow as Q reinvests earnings. Assume that the ROE and payout ratio stay constant for the next two years. After that, competition forces ROE down to 10.0% and the payout ratio increases to 0.80. The cost of capital is 11.0%. Question: What is Q's stock worth per share? O 106.1 O 121.7 O 111.6 118.2 O 74.9
Company Q’s current return on equity (ROE) is 16%. It pays out 60 percent of earnings as cash dividends (payout ratio = 0.60). Current book value per share is $57. Book value per share will grow as Q reinvests earnings.Assume that the ROE and payout ratio stay constant for the next four years. After that, competition forces ROE down to 12.5% and the payout ratio increases to 0.70. The cost of capital is 12.5%.a. What are Q’s EPS and dividends in years 1, 2, 3, 4, and 5? (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. What is Q’s stock worth per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Company Q's current return on equity (ROE) is 16%. It pays out 60 percent of earnings as cash dividends (payout ratio = 0.60). Current book value per share is $57. Book value per share will grow as Q reinvests earnings. Assume that the ROE and payout ratio stay constant for the next four years. After that, competition forces ROE down to 12.5% and the payout ratio increases to 0.70. The cost of equity is 12.5%. a. What are Q's EPS and dividends in years 1, 2, 3, 4, and 5? b. What is Q's stock worth per share? Complete this question by entering your answers in the tabs below. Required A Required B What are Q's EPS and dividends in years 1, 2, 3, 4, and 5? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Year 1 2 EPS Dividends 34 5
Company Q's current return on equity (ROE) is 14%. It pays out 60 percent of earnings as cash dividends (payout ratio = 0.60). Current book value per share is $70. Book value per share will grow as Q reinvests earnings. Assume that the ROE and payout ratio stay constant for the next four years. After that, competition forces ROE down to 12.5% and the payout ratio increases to 0.90. The cost of equity is 12.5%. What are Q's EPS and dividends in years 1, 2, 3, 4, and 5? What is Q's stock worth per share?
Company Q's current return on equity (ROE) is 13%. It pays out 45 percent of earnings as cash dividends (payout ratio = 0.45). Current book value per share is $63. Book value per share will grow as Q reinvests earnings. Assume that the ROE and payout ratio stay constant for the next four years. After that, competition forces ROE down to 11.0% and the payout ratio increases to 0.75. The cost of capital is 11.0%. a. What are Q's EPS and dividends in years 1, 2, 3, 4, and 5? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Year 1 2 3 4 5 EPS Dividends b. What is Q's stock worth per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Stock worth per share
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Barton Industries expects next year's annual dividend, D1, to be $2.40 and it expects dividends to grow at a constant rate g = 4.4%. The firm's current common stock price, P0, is $21.40. If it needs to issue new common stock, the firm will encounter a 5% flotation cost, F. Assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. What is the flotation cost adjustment that must be added to its cost of retained earnings? Do not round intermediate calculations. Round your answer to two decimal places. % What is the cost of new common equity considering the estimate made from the three estimation methodologies? Do not round intermediate calculations. Round your answer to two decimal places. %
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**Please solve using Excel and show formulas.** Company Q’s current return on equity (ROE) is 16%. It pays out 50 percent of earnings as cash dividends (payout ratio = 0.50). Current book value per share is $42. Book value per share will grow as Q reinvests earnings. Assume that the ROE and payout ratio stay constant for the next two years. After that, competition forces ROE down to 8% and the payout ratio increases to 0.90. The cost of capital is 15%. Question: What is Q’s stock worth per share? (Choose the option closest to your answer) Multiple Choice $33 $41 $36 $44 $39

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