10.00 pointsSave& ExitHouse of Haddock has 5,050 shares outstanding and the stock price is $145. The company is expected to pay a dividend of $25 per share next year and thereafter the dividend is expected to grow indefinitely by 2% a year. The President, George Munow makes a surprise announcement: He says that the company will henceforth distribute half the cash in the form of dividends and the remainder will be used to repurchase stock. The repurchased stock will not be entitled to the dividend.a-1. What is the total value of the company before the announcement?Total value24a-2. What is the total value of the company after the announcement?Total value$4a-3. What is the value of one share?Value per shareb. What is the expected stream of dividends per share for an investor who plans to retain his shares rather than sell them back to the company? Check your estimate of share value by discounting this stream of dividends per share (Do not roundintermediate calculations. Round your answers to 2 decimal places.)YearExpected DividendReferenceseBook & ResourcesDifficulty: IntermediateWorksheet654 PM12/1/2020S.SPScrF12F11F10F9F8BackspoceF7F6F5F4F3F2F1Esc$44.RWTabG

House of Haddock has 5,050 shares outstanding and the stock price is $145. The company is expected to pay a dividend of $25 per share next year and thereafter the dividend is expected to grow indefintely by 2% a year The President George now makes a surprise announcement He says that the company will henceforth distribute half the cash in the form of dividends and the remainder will be used to repurchase stock The repurchased stock will not be entied to the dividend a-1. What is the total value of the company before the announcement? Total value a-2. What is the total value of the company after the announcement? Total value a-3. What is the value of one share? Value per share b. What is the expected stream of dividends per share for an investor who plans to retain his shares rather than sell them back to the company Check your estimate of share value by discounting thes stream of dvidends per share (De not round intermediate calculations. Round your answers to 2 decimal places.) Year Expected Dividend eBook & Resources References

House of Haddock has 5,050 shares outstanding and the stock price is $145. The company is expected to pay a dividend of $25 per share next year and thereafter the dividend is expected to grow indefintely by 2% a year The President George now makes a surprise announcement He says that the company will henceforth distribute half the cash in the form of dividends and the remainder will be used to repurchase stock The repurchased stock will not be entied to the dividend a-1. What is the total value of the company before the announcement? Total value a-2. What is the total value of the company after the announcement? Total value a-3. What is the value of one share? Value per share b. What is the expected stream of dividends per share for an investor who plans to retain his shares rather than sell them back to the company Check your estimate of share value by discounting thes stream of dvidends per share (De not round intermediate calculations. Round your answers to 2 decimal places.) Year Expected Dividend eBook & Resources References

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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Your company will produce a free cash flow for equity holders (FCFE) equal to 5 millions this year and 10 millions next year when the company will be liquidated. You own 5% of the equity of the company. The company is planning to pay out more than the FCFE at the end of the first year by issuing 3,000,000 worth of new equity (assume that the money raised via equity issuance is used to pay the dividend to both current and new shareholders). If the equity expected return is 9% and there are 500,000 shares outstanding, what are the dividends paid at the end of the first and the second year?
JRN Enterprises just announced that it plans to cut its next-year dividend, D₁, from $2.25 to $1.30 per share and use the extra funds to expand its operations. Prior to this announcement, JRN's dividends were expected to grow at 5% per year and JRN's stock was trading at $25.50 per share. With the new expansion, JRN's dividends are expected to grow at 10% 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. $14.73 OB. $58.84 C. $34.00 D. $25.50
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
Forral Company has never paid a dividend. But the company plans to start paying dividends in two years-that is, at the end of Year 2. The first dividend is expected to equal $1 per share. The second dividend and every dividend thereafter are expected to grow at a 6 percent rate. If Investors require a 14 percent rate of return to purchase Forral's common stock, what should be the market value of its stock today? Do not round intermediate calculations. Round your answer to the nearest cent. $______.
Chamberlain Corporation is expected to pay the following dividends over the next four years: $13.20, $9.20, $8.20, and $3.70. Afterward, the company pledges to maintain a constant 4% growth rate in dividends forever. If the required return on the stock is 12%, what is the current share price? (Do not round intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)
House of Haddock has 5,060 shares outstanding and the stock price is $146. The company is expected to pay a dividend of $26 per share next year and thereafter the dividend is expected to grow indefinitely by 3% a year. The president, George Mullet, now makes a surprise announcement: He says that the company will henceforth distribute half the cash in the form of dividends and the remainder will be used to repurchase stock. The repurchased stock will not be entitled to the dividend. a-1. What is the total value of the company before the announcement? a-2. What is the total value of the company after the announcement? a-3. What is the value of one share? b. What is the expected stream of dividends per share for an investor who plans to retain his shares rather than sell them back to the company? Check your estimate of share value by discounting this stream of dividends per share. Complete this question by entering your answers in the tabs below. Req A1 to A3 Req B a-1. What is the total…
Shatin Intl. has 9.8 million shares, an equity cost of capital of 12.8% and is expected to pay a total dividend of $19.1 million each year forever. It announces that it will increase its payout to shareholders. Instead of increasing its dividend, it will keep it constant and will start repurchasing $10.3 million of stock each year as well. What is your estimate of Shatin's stock price after this announcement?
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Storm plc has 5,000 shares outstanding and the stock price is £140. The company is expected to pay a dividend of £20 per share next year and thereafter the dividend is expected to grow indefinitely by 5% a year. The president, Jack Mora, now makes a surprise announcement: He says that the company will henceforth distribute half the cash in the form of dividends and the remainder will be used to repurchase stock. The repurchased stock will not be entitled to the dividend. a) Discuss how the announcement affect the value of the company. b) Advise the shareholders should they choose the cash dividends, or the stock repurchase.
Shatin Intl. has 10 million shares, an equity cost of capital 12%, and is expected to pay a total dividend of $20 million each year forever. It announces that it will increase its payout to shareholders. Instead of increasing its dividend, it will keep it constant and will start repurchasing $12 million of stock each year as well. How much will its stock price increase? The stock price will increase by $ (Round to the nearest cent.)
It is January 2023 and you are the CFO of Metrix Systems the firm does not reinvest any of its eamings it will expect to achieve Corp. The firm only 5 points Save Ansa pays dividends. The firm is expecting earnings per share (EPS) of $10 at the end of this year. If the same EPS of $10 each year in perpetuity. You are considering changing the dividend policy of the payout rate of 60% each year. The firm's return on new investment is 18% and its cost of equity capital (r) is 12%. Calculate the best one. firm. Specifically, you want the firm to target a the share price under the proposed payout policy. Select the best one $ 98.33 $166.67 $83.33 $223.33 $125
"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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