Flowers R Us sells flowers and vases successfully all year round. The cost of production, taxes, and other expenses are covered by the income stream, and there is enough cash left to pay out dividends to the stockholders. The return that the investors receive from Flowers R Us is 14 percent each year. Just a couple of days ago, Flowers R Us paid a dividend of $11.40 on each stock share. Recently, Flowers R Us announced that it plans to reduce the dollar amount of its annual dividend by 5 % each year, and that it will be maintaining this new dividend structure from this point on. If you buy one share of Flowers R Us' stock in today's market, how much should you expect to pay for it? (Increase the decimal places and do not round your intermediate calculations. Only your final answer should be rounded to 2 decimal places, e.g., 32.16.) Current share price

Flowers R Us sells flowers and vases successfully all year round. The cost of production, taxes, and other expenses are covered by the income stream, and there is enough cash left to pay out dividends to the stockholders. The return that the investors receive from Flowers R Us is 14 percent each year. Just a couple of days ago, Flowers R Us paid a dividend of $11.40 on each stock share. Recently, Flowers R Us announced that it plans to reduce the dollar amount of its annual dividend by 5 % each year, and that it will be maintaining this new dividend structure from this point on. If you buy one share of Flowers R Us' stock in today's market, how much should you expect to pay for it? (Increase the decimal places and do not round your intermediate calculations. Only your final answer should be rounded to 2 decimal places, e.g., 32.16.) Current share price

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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Similar questions

Ketchup Corporation is currently trading at $40 per share. There are 0.5 million shares outstanding, and the company has no debt. You believe that the value of the company would increase by 20% over 1 year if the management were replaced. How much would you gain from acquiring 60% of Ketchup's shares by getting a 1-year, 10%-interest loan? Hint: you are not using your own money. The money for the investment comes from the loan. $4,000,000. $0. $2,400,000. $1,320,000. $1,200,000.
JRN Enterprises just announced that it plans to cut its next-year dividend, D₁, from $2.50 to $1.10 per share and use the extra funds to expand its operations. Prior to this announcement, JRN's dividends were expected to grow at 3% 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 6% 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. $11.00 B. $25.00 OC. $35.71 O D. $15.71
Ketchup Corporation is currently trading at $35 per share. There are 8 million shares outstanding, and the company has no debt. You believe that the value of the company would increase by 30% over 1 year the management were replaced. How much would you gain from acquiring 60% of the Ketchup's shares by getting a 1-year 10%-interest loan? Hint: you are not using your own money. The money for the investment comes from the loan Mutiple Choice $84.000.000 $50,400,000 $33,600,000 $0. $107,520.000
1. Canada milk successfully sell milks throughout the year. The income they receive covers all milk production costs, taxes, etc. and leaves enough cash to distribute among the stockholders. Based on the dividend and other income that the investors receive from Canada Milk, the return each year to the investors is equal to 14 percent. A $8.90 per-share dividend was paid by Canada Milk just one day ago. Mr. Canada Milk , the company's manager, has recently announced the company's plan to reduce its annual dividend payment by 4 percent. It is the general belief that this new dividend policy will continue forever. (Increase the decimal places and do not round your intermediate calculations. Only your final answer should be rounded to 2 decimal places, e.g., 42.13.) How much should it cost you to buy each share of Canada Milk's stock in today's market? 2. Your husband would like to try his luck and buy some stock shares, so he can have some additional dividend income in the near…
Sims Manufacturing is expected to generate $195 million in free cash flow next year, and FCF is expected to grow at a constant rate of 6% per year indefinitely. Sims has no debt or preferred stock, and its required rate of return is 12%. If Sims has 45 million shares of common stock outstanding, what is the stock's value per share? (Answer to the nearest cent. i.e. one thousand dollars would be entered 1000.00).
Railway Cabooses just paid its annual dividend of $3.30 per share. The company has been reducing the dividends by 12.1 percent each year. How much are you willing to pay today to purchase stock in this company if your required rate of return is 14 percent?
Merton Analytics is considering changes in its working capital policies to improve its cash ﬂow cycle. Merton’s sales last year were $4,250,000 (all on credit), and its net proﬁt margin was 7%. Its inventory turnover was 7.5 times during the year, and its DSO was 41 days. Its annual cost of goods sold was $2,200,000. The ﬁrm had ﬁxed assets totaling $585,000. Merton’s payables deferral period is 42 days. Calculate Merton’s cash conversion cycle. Assuming Merton holds negligible amounts of cash and marketable securities, calculate its total assets turnover and ROA. Suppose Merton’s managers believe the annual inventory turnover can be raised to 9.5 times without affecting sales. What would Merton’s cash conversion cycle, total assets turnover, and ROA have been if the inventory turnover had been 9.5 for the year?
The Rock Timber Co. Had total earnings last year of P5million but expects total earnings to drop to P4,750,000 this year because of a slump in the housing industry. There are currently one million shares of common stock outstanding. The company has P4million worth of investments to undertake this year. The company financed 40% of its investment with debt and 60% with equity capital. The company paid P3 per share in dividends last year. a. If the company follows a pure residual dividend policy, how large a dividend will each shareholder receive this year? b. If the company maintains a constant payout ratio each year, how large will each shareholder receive this year? c. If the company follows a constant Peso dividend policy, how large a dividend will each stockholder receive this year?
Mercury Satellite Corporation earned $20 million for the fiscal year ending yesterday. The firm's policy is to pay out 30 percent of its earnings as dividends. The remaining 70 percent of earnings is retained by the company for use in projects. The company has 2 million shares of common stock outstanding. The current stock price is $90. The historical return on equity (ROE) of 15 percent is expected to continue in the future. What is the required rate of return on the stock? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Good Food just paid its annual dividend of $4.63 a share. The firm recently announced that all future dividends will be increased by 3.8 percent annually. What is one share of this stock worth to you if you require a 16 percent rate of return?
"Finance3000" is a young start-up company. It will not pay any dividends on its stock over the next nine years because it plans to use retained earnings on expanding its business. "Finance3000" will pay a $14 per share dividend 10 years from today. After that the company will increase the dividend by 6 percent per year, in perpetuity. The required return on this stock is 12.5 percent. Calculate the value of one share of "Finance3000"'s stock. (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Current share price

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