Ans?? general Accounting question The dividend policy of Berkshire Gardens Inc.can be represented by a gradual adjustment toa target dividend payout ratio. Last yearBerkshire had earnings per share of $3.00 andpaid a dividend of $0.60 a share. This year itestimates earnings per share will be $4.00.Find its dividend per share for this year if ithas a 25% target payout ratio and uses fiveyears period to adjust its dividend.A. $0.65.B. $0.80.C. $0.85.

Step 1: Define Dividend PolicyThe policy or the strategy that a business entity forms for the…

Answered: The dividend policy of Berkshire…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter7: Common Stock: Characteristics, Valuation, And Issuance

Section: Chapter Questions

Problem 4P

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The dividend policy of Berkshire Gardens Inc. can be represented by a gradual adjustment to a target dividend payout ratio. Last year Berkshire had earnings per share of US$3.00 and paid a dividend of US$0.60 a share. This year it estimates earnings per share will be US$4.00. Find its dividend per share for this year if it has a 25% target payout ratio and uses a five-year period to adjust its dividend. US$0.85. US$0.50. US$0.68. US$0.80.
Paisios Ltd paid a $4.00 dividend per share recently. Paisios normally pays dividends once year. Analyst estimates that Paisios will increase its dividends 10% per year indefinitely. The current market price of a share is $25. Find the rate of discount which Analyst used for Paisios.
The earnings, dividends, and stock price of Stan Company are expected to grow at 7 percent per year after this year. Stan Company's common stock sells for P23 per share, its last dividend was P2.00 and the company pay P2.14 at the end of the current year. Stan Company should pay P2.50 flotation cost. Using the dividend growth model, what is the expected cost of retained earnings for Stan Company? Round off your final answer up to two decimal places.
Collins Inc. has just paid its annual dividend of $2.2. The company expects that its dividends in the first three years will be $1.9, $2.3, and $2.7, respectively. The company estimates an EPS in year three to be $5.6 , the EPS in year four to be $6.0, and the median leading industry P/E in year three to be 20. Calculate Collins Inc. current value if the cost of equity is 14%.
Johnson Products earned $4.35 per share last year and paid a dividend of $1.70 per share. If ROE was 17 percent, what is the sustainable growth rate? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
Cascading mining company expects its earnings and dividends to increase by 7 percent per year over the next 6 years and then to remain relatively constant thereafter. The firm currently (that is, as of year 0) pays dividend of $5 per share. Determine the value of a share of Cascade stock to an inverstor with a 12 percent required rate of return. If possible please give detail with the square root in Excel.
Stability Inc. has maintained a dividend rate of $4 per share for many years. The same rate is expected to be paid in future years. If investors require a 14 percent rate of return on similar investments, determine the present value of the company's stock. a. $16.93 b. $31.25 c. $41.20 d. $36.40 e. $28.57
Tip Top Hats (TTH) is expected to grow at a 2 percent rate for as long as it is in business. Currently the company's common stock is selling for $36 per share. The most recent dividend paid by TTH was $2.00 per share. If new common stock is issued, TTH will incur flotation costs equal to 8.0 percent. What is the company's cost of retained earnings? Round your answer to two decimal places. % What is its cost of new common equity? Round your answer to two decimal places. %
help please
Use the following inputs and the finite horizon from of the residual income model to compute the value of Southern Trust Bank (STB) shares as of 31 December 2007: i. ROE will continue at 15% for the next five years and 10% thereafter with all earnings reinvested (no dividends paid) ii. Cost of equity is 10% iii. Beginning period book value at year-end 2007 is $10
General Accounting
Last year, Big W Company reported earnings per share of $2.50 when its stock was selling for$50.00. If its earnings this year increase by 10 percent and the P/E ratio remains constant, whatwill be the price of its stock? Explain.

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