Excel Online Structured Activity: Dividend PolicyBoehm Corporation has had stable earnings growth of 10% a year for the past 10 years, and in 2015 Boehm paid dividends of $3.4 million on net incomeof $12.5 million. However, in 2016 earnings are expected to jump to $17.5 million, and Boehm plans to invest $9.5 million in a plant expansion. This one-time unusual earnings growth won't be maintained, though, and after 2016 Boehm will return to its previous 10% earnings growth rate. Its target debtratio is 35%.The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the questionsbelow.Open spreadsheeta. Calculate Boehm's total dividends for 2016 under each of the following policies. Enter your answers in dollars. For example: $2.9 million should beentered as $2,900,000. Do not round intermediate calculations. Round your answers to the nearest dollar.1. Its 2016 dividend payment is set to force dividends to grow at the long-run growth rate in earnings.$2. It continues the 2015 dividend payout ratio.$

The dividend can be defined as the distribution of earnings to the shareholders of the company. The…

Answered: Excel Online Structured Activity:…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Lockheed Martin (LM) the aerospace and defense conglomerate, has a stellar dividend history, with steadily increasing quarterly payments since 1995. In recent years, however, the rate of dividend growth has declined from a solid 15.6% in 2014 to 7.2% in 2017 2017 and then stabilize at a healthy 7.2% thereafter. It is observed that the last dividend was $4.60. A 10% expected rate of return is assumed and the number of years over which the growth rate will transition is four. What is the Intrinsic value of Lockheed Martin (LM)?
Management action and stock value REH Corporation's most recent dividend was $2.78 per share, its expected annual rate of dividend growth is 5%, and the required return is now 15%. A variety of proposals are being considered by management to redirect the firm's activities. Determine the impact on share price for each of the following proposed actions. a. Do nothing, which will leave the key financial variables unchanged. b. Invest in a new machine that will increase the dividend growth rate to 9% and lower the required return to 11%. c. Eliminate an unprofitable product line, which will increase the dividend growth rate to 7% and raise the required return to 16%. d. Merge with another firm, which will reduce the growth rate to 1% and raise the required return to 19%. e. Acquire a subsidiary operation from another manufacturer. The acquisition should increase the dividend growth rate to 9% and increase the required return to 16%. a. If the firm does nothing that will leave the key…
Video Excel Online Structured Activity: Nonconstant growth Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $1.50 coming 3 years from today. The dividend should grow rapidly - at a rate of 20% per year - during Years 4 and 5; but after Year 5, growth should be a constant 6% per year. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below. X Open spreadsheet If the required return on Computech is 18%, what is the value of the stock today? Round your answer to the nearest cent. Do not round your intermediate calculations. Check My Work Reset Problem
Abbott, Inc., is expected to maintain a constant 2% annual growth rate in its dividends, indefinitely. If the company has just paid $1.5 annual dividend and its current price is $62 per share, what comes closest to the required return on the company's stock? 0000 7.5% 4.5% 6% 3.5%
Integrative: Conflicting Rankings The High-Flying Growth Company (HFGC) has been expanding very rapidly in recent years, making its shareholders rich in the process. The average annual rate of return on the stock in the past few years has been 22%, and HFGC managers believe that 22% is a reasonable figure for the firm's cost of capital. To sustain a high growth rate, HFGC's CEO argues that the company must continue to invest in projects that offer the highest rate of return possible. Two projects are currently under review. The first is an expansion of the firm's production capacity, and the second project involves introducing one of the firm's products into a new market. Cash flows from each project appear in the following table: Year Plant expansion Product introduction 0 -4,000,000 -500,000 1 2,000,000 375,000 2 2,000,000 350,000 3 3,000,000 400,000 4 3,000,000…
Boehm Corporation has had stable earnings growth of 9% a year for the past 10 years and in 2018 Boehm paid dividends of $3.7 million on net income of $12.7 million. However, in 2019 earnings are expected to jump to $17.4 million, and Boehm plans to invest $9.398 million in a plant expansion. This one-time unusual earnings growth won't be maintained, though, and after 2019 Boehm will return to its previous 9% earnings growth rate. Its target debt ratio is 35%. Boehm has 1 million shares of stock. a. Calculate Boehm's dividend per share for 2019 under each of the following policies: 1. Its 2019 dividend payment is set to force dividends per share to grow at the long-run growth rate in earnings. Round your answer to the nearest dollar. $ 2. It continues the 2018 dividend payout ratio. Round intermediate calculations to four decimal places. Round your answer to the nearest dollar. $ 3. It uses a pure residual policy with all distributions in the form of dividends (35% of the $9.398 million…
Matteo Company was expected to pay a $4.00 dividend in the coming year, dividends were expected to grow at a 7% rate indefinitely, and investors required a 12% rate of return. Recently, however, Matteo introduced a successful new product line. As a result, analysts have revised their estimates to a $5.00 dividend and an 8% growth rate, and they have decreased their required rate of return to 11%. What change in the price of Matteo stock should occur as a result of these events? +$ 86.67. +$ 80.00. +$ 25.00. +$166.67.
Assume today is December 31, 2013. Imagine Works Inc. just paid a dividend of $1.10 per share at the end of 2013. The dividend is expected to grow at 18% per year for 3 years, after which time it is expected to grow at a constant rate of 5.5% annually. The company's cost of equity (rs) is 9.5%. Using the dividend growth model (allowing for nonconstant growth), what should be the price of the company's stock today (December 31, 2013)? Do not round intermediate calculations. Round your answer to the nearest cent.$ per share
Common stock value: Constant growth Seagate Technology is a global leader in data storage solutions and a high-yield dividend payer. From 2015 through 2019, Seagate paid the following per-share dividends: Year Dividend per share 2019 2018 2017 2016 2015 Assume that the historical annual growth rate of Seagate dividends is an accurate estimate of the future constant annual dividend growth rate. Use a 21% required rate of return to find the value of Seagate's stock immediately after it paid its 2019 dividend of $2.49. $2.49 2.26 1.87 1.23 1.49 The value of Seagate's stock is $. (Round to the nearest cent.) C
Let’s assume that Company A’s dividends grew 18.4% each year for four years beginning in 2009, after which the growth rate declined linearly for an additional three years before stabilizing at 7.2% in 2017. The expected rate of return is assumed to 10% and the ‘current’ dividend in 2009 is $2.28 What is Company A’s intrinsic value
Management action and stock value REH Corporation's most recent dividend was $1.79 per share, its expected annual rate of dividend growth is 5%, and the required return is now 15%. A variety of proposals are being considered by management to redirect the firm's activities. Determine the impact on share price for each of the following proposed actions. a. Do nothing, which will leave the key financial variables unchanged. b. Invest in a new machine that will increase the dividend growth rate to 7% and lower the required return to 13%. c. Eliminate an unprofitable product line, which will increase the dividend growth rate to 9% and raise the required return to 16%. d. Merge with another firm, which will reduce the growth rate to 2% and raise the required return to 16%. e. Acquire a subsidiary operation from another manufacturer. The acquisition should increase the dividend growth rate to 8% and increase the required return to 16%. ... a. If the firm does nothing that will leave the key…
Excel Online Structured Activity: Nonconstant growth Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Computech to begin paying dividends, beginning with a dividend of $1.25 coming 3 years from today. The dividend should grow rapidly - at a rate of 42% per year - during Years 4 and 5; but after Year 5, growth should be a constant 6% per year. The data has been collected in the Microsoft Excel Online file below. Open the spreadsheet and perform the required analysis to answer the question below, Open spreadsheet If the required return on Computech is 12%, what is the value of the stock today? Round your answer to the nearest cent. Do not round your intermediate calculations.

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