“Many companies use stock repurchases to increase earnings per share. For example, supposethat a company is in the following position:Net profit $10 millionNumber of shares before repurchase 1 millionEarnings per share $10Price–earnings ratio 20Share price $200The company now repurchases 200,000 shares at $200 a share. The number of sharesdeclines to 800,000 shares and earnings per share increase to $12.50. Assuming the price–earnings ratio stays at 20, the share price must rise to $250.”Discuss.

Q: × A 10% stock dividend will increase the number of shares issued by 12800 (128000 × 10%). At a…

A: Step 1:Answer is  ------->Option C   : Retained Earnings will decrease by $ 384000 and total paid…

Q: Best Buy currently has 10 million shares outstanding and recently reported free cash flow of $50…

A: There are different metrics and equations that we use in the area of equity valuation. One such…

Q: CleanClothes Corp. growing quickly. Dividends are expected to grow at a 19 percent rate for the next…

A: The dividend growth model is a method of evaluating a company's stock that does not take into…

Q: Lincoln Ladies Fashions is growing quickly. Dividends are expected to grow at a 19 percent rate for…

A: Horizon value =Dn×1+gr-g where, DN= dividend at the begining of constant growthr= rate of returng =…

Q: Dream As You Can is expected to pay $3 dividends each year over the next three years. It is then…

A: Solution:Gordon Growth Model (GGM) is the equity model which measures intrinsic value of share.For…

Q: A corporation has just paid dividend $1.000. If the dividend can grow 20% for the first three years…

A: Solution Concept Dividend discount model can be followed to get the price of the stock We need to…

Q: If the stock sells for $35 a share, what is the company's cost of equity?

A: The constant dividend growth model or Dividend Discount Model is used to calculate the present value…

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Q: Analysts that follow JPMorgan Chase, one nation's largest provider's of financial services,…

A: Earnings per share of the company JP would increase from $6.69 to $7.64.

Q: Your investment bankers price your IPO at $15.08 per share for 10.5 million shares. If the price at…

A: Percentage Underpricing in IPO = [(P1−P0)/P0]∗100WhereP1 = Price at the end of first trading session…

Q: If the company has 4 million shares outstanding, and these shares are trading at a price of $8.24…

A: The market price of a company's shares reflects how investors perceive the value and potential of…

Q: 4. Luke A. Manufacturing paid a dividend yesterday of $5 per share (D0= $5). The dividend is…

A: According to the Gordon growth model, the value of an equity share is the present value of dividends…

Q: $48.29

A: Given :-Current year dividend paid (D0) = $2.37First year Growth= 25%Now First year growth in…

Q: Suppose simons corp just paid a dividend of $4.30. The company and its dividends are growing at a…

A: Dividend Paid (D0) = $4.3 Dividend growth rate = 3.6% Required return for stock (Ke) = 10.8%

Q: Sandhill’s Copper Corp. management expects its common stock dividends to grow 1.74 percent per year…

A: As per Dividend Discount Model, Ke = (D1/P0) + g Where D0 = Dividend i.e. $3.00  ke = Cost of common…

Q: 4. Eaton Corporation just completed an IPO (Initial Public Offering) in which its common stock sold…

A: according to gordon constant  growth formula: price = D1r-gwhere,D1= DIVIDEND NEXT YEARr = rate of…

Q: Given the information in parts (a) through (d), and your answers to those problems, what is Growth…

A: Cost of equity using the DDM Model = (D1/P0) + g Cost of preferred stock = Annual dividend/ Stock…

Q: A7X Corporation just paid a dividend of $1.35 per share. The dividends are expected to grow at 35…

A: Current Dividend = d0 = $1.35Growth rate for next 8 years = g8 = 35%Growth Rate after 8 Years = g =…

Q: Synovec Company is growing quickly. Dividends are expected to grow at a rate of 23 percent for the…

A: Just paid dividend = $1.50Growth rate after year 3 (g) = 0.07Required return (r) = 0.13Current price…

Q: Your investment bankers price your IPO at $15.23 per share for 10.6 million shares. If the price at…

A: a) Percentage​ underpricing:  Percentage underpricing = (Trading price - Offer price)/ Offer price…

Q: Please show work   The stock of Matrix Computing sells for $65, and last year’s dividend was $2.53.…

A: The stock of Matrix Computing sells for $65, and last year’s dividend was $2.53. Security analysts…

Q: The Pierce Co. just issued a dividend of $3.00 per share on its common stock. The company is…

A: Company's Cost of equity = [Dividend * (1+growthrate) / Current Price] + growth rate

Q: Hammer Inc. just paid its common equity owners a dividend of $2.5. Hammer's management indicated in…

A: The Dividend Growth Model refers to a model that helps in calculating the intrinsic value of a stock…

Q: 4. Grace Manufacturing paid a dividend yesterday of $5 per share (D0 = $5). The dividend is expected…

A: This approach can be used by investors to find the cost of equity financing. If an investor wants to…

Q: The common stock of Permanent Assurance Corporation currently trades at $40.00 per share, which is…

A: Note: Answer to parts 1-4 is incorrect as the expert has incorrectly taken the dividend value and…

Q: Suppose Wacken, Limited just issued a dividend of $2.52 per share on its common stock. The company…

A: The cost of equity is the expense associated with the stake of equity shareholders in the company.…

Q: Your company had net income of $82,500 for the year just ended.  Dividends of $35,250 were paid on…

A: Net income = $82,500 Dividend paid = $35,250 Dividend per share = $35,250 / 62,000 =…

Q: You expect future free cash flow (FCF) of a company to grow at a contstant rate g. Given the FCF for…

A: Given:

Q: A firm recently paid a dividend of $1.75 per share. The dividend is expected to grow by 13% for the…

A: To calculate the stock value per share using the dividend growth model, we can use the formula:Stock…

Stock Yields

The stock yield is otherwise known as the dividend yield. The dividend yield is an annual payment of the stock dividends to the holder of a firm’s stock. The dividend yield is a financial ratio to measure the value of dividend payout every year for the relative stock price. The yield of a stock is usually shown in a percentage that discloses the expected future earnings from stock depending on the current stock price in the future. Stock yield will change depending on the market fluctuations and in accordance with the market fluctuations, the dividends will be increased or decreased by the firm.