Manifest Ltd announces that it will pay a $75 per dividend next year, followed by a final dividend of $30 per share in the year after. Mrs. Emily Donn has 50 shares in STL Inc. She wishes to limit her income from investments to no more than $35 in the first year. Demonstrate through relevant computations, how she can achieve this goal through homemade dividends if the required return on Manifest Ltd's shares is 9%. What will be Mrs. Donn's earning in the second year? Show detailed workings in support of your response

Manifest Ltd announces that it will pay a $75 per dividend next year, followed by a final dividend of $30 per share in the year after. Mrs. Emily Donn has 50 shares in STL Inc. She wishes to limit her income from investments to no more than $35 in the first year. Demonstrate through relevant computations, how she can achieve this goal through homemade dividends if the required return on Manifest Ltd's shares is 9%. What will be Mrs. Donn's earning in the second year? Show detailed workings in support of your response

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Sooner-than-Later (STL) Inc. announces that it will pay a $75 per dividend next year, followed by a final dividend of $30 per share in the year after. Mrs. Donna Holder has 50 shares in STL Inc. She wishes to limit her income from investments limited to $35 in the first year. Demonstrate through relevant computations, how she can achieve this goal through homemade dividends if the required return on STL Inc’s shares is 9%. What will be Mrs. Holder’s earning in the second year?
2. An analyst for Acme, R. Runner, has recommended that Peter the Anteater purchase shares in a private firm (a firm that is not traded on any exchange) called Dynamite Corp. Dynamite has 30% debt and 70% equity. R. Runner believes that Dynamite will generate a return of 10% over the next year. Since Y. Lee is new to the job, he decides to do a little research on his own. He finds a company, Explosions Unlimited, that has very similar business as Dynamite. Explosions has an equity beta of 1.05 and is composed of 40% debt and 60% equity. Should Peter the Anteater buy the stock? The expected return on the market is 12% and the expected risk-free rate is 5%.
Richard owns one share of stock of Abuela Pastries and one share of stock of Basura Baking. The total value of his holdings is $651.09. Both stocks pay annual dividends that are expected to continue forever. The expected return on Abuela Pastries stock is 19.80 percent and its annual dividend is expected to remain at $22.80 forever. What is the next dividend paid by Basura Baking expected to be if the stock has an annual return of 10.10 percent and dividends are expected to grow by 3.70 percent annually? The next dividend for both firms' stocks will be paid in one year. $68.48 (plus or minus 5 cents) $34.30 (plus or minus 5 cents) $35.57 (plus or minus 5 cents) $33.08 (plus or minus 5 cents) the answer cannot be obtained based on the given information
I need help with this problem
Samuel just purchased one IBM stock share for 7 dollars. IBM stock price has a 20% chance to be 3, a 30% chance to be 19, and a 50% chance to be 7 next year. What is Samuel's expected return (report the return as a decimal number with four decimal places such as 0.0665) from holding the IBM share for one year?
Emily is holding shares of stock A with market value of $100,000 that includes unrealized capital gains of $20,000. Tax rate on realized capital gains is 25%. Stock A is expected to earn annual return of 6.5% in the future. Stock B is expected to earn an 8.7% annual return in the future. What will be the after-tax value of switching to stock B now at the end of the holding period of three more years? Below 109,000 Between 109,000 and 110,500 Between 110,500 and 112,000 Between 112,000 and 113,500 Between 113,500 and 115,000 Above 115,000
Angela invested his savings in shares of a new company. The company's share price dropped by $3.25 at the end of the first year, and by a further $0.75 at the end of the second year. The share price was $28.44 at the end of the second year. a. Calculate the original share price (at the beginning of the first year). Round to the nearest cent. b. Calculate the percent change in the share price over the two-year period. % Round to two decimal places.
Vijay shiyal