You own 3,000 shares of stock in Avondale Corp. You will receive a $0.85 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $47 per share. The required return on Avondale stock is 12 percent. (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) What is the current share price of your stock (ignoring taxes)? Share price If you would rather have equal dividends in each of the next two years by creating homemade dividends, what would be the cash flow for Year 1 and Year 2? Year 1 cash flow Year 2 cash flow $ $

You own 3,000 shares of stock in Avondale Corp. You will receive a $0.85 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $47 per share. The required return on Avondale stock is 12 percent. (Do not round intermediate calculations. Round the final answers to 2 decimal places. Omit $ sign in your response.) What is the current share price of your stock (ignoring taxes)? Share price If you would rather have equal dividends in each of the next two years by creating homemade dividends, what would be the cash flow for Year 1 and Year 2? Year 1 cash flow Year 2 cash flow $ $

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

Suppose you own 2,000 common shares of Laurence Incorporated. The EPSis $10.00, the DPS is $3.00, and the stock sells for $80 per share. Laurenceannounces a 2-for-1 split. Immediately after the split, how many shareswill you have, what will the adjusted EPS and DPS be, and what would youexpect the stock price to be?
Smiling Elephant, Inc., has an issue of preferred stock outstanding that pays a $5.70 dividend every year, in perpetuity. If this issue currently sells for $80.45 per share, what is the required return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Required return %
Al
You purchase 110 shares for $40 a share ($4,400), and after a year the price falls to $35. Calculate the percentage return on your investment if you bought the stock on margin and the margin requirement was (ignore commissions, dividends, and interest expense): 15 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place. % 50 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place. % 75 percent. Use a minus sign to enter the amount as a negative value. Round your answer to one decimal place. %
You purchase 100 shares of stock for $25 a share. The stock pays a $2 per share dividend at year-end. What is the rate of return on your investment if the end-of-year stock price is (i) $23; (ii) $25; (iii) $26? What is your real (inflation-adjusted) rate of return if the inflation rate is 5%? (i) $23 (ii) $25 (iii) $26
Suppose you purchase one share of the stock of Cereal Correlation Company at the beginning of year 1 for $35. At the end of year 1, you receive a $3 dividend, and buy one more share for $44. At the end of year 2, you receive total dividends of $6 (i.e., $3 for each share), and sell the shares for $50 each. The time-weighted return on your investment is? When performing the calculations, do not round any inputs or interim results until you get the final answer. Round your final answer to four places after the decimal point. The dollar-weighted return on your investment is? When performing the calculations, do not round any inputs or interim results until you get the final answer. Round your final answer to four places after the decimal point.
JJ Industries will pay a regular dividend of $3.10 per share for each of the next four years. At the end of four years, the company will also pay out a liquidating dividend. If the discount rate is 11 percent, and the current share price is $67, what must the liquidating dividend be? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Last year, you purchased 700 shares of GreenZone Energy Corp stock at $630 per share. You later sold all the shares for $675 per share. What is your holding period return on this investment? Enter your answer as a percentage rounded to 2 decimal places.
Five Star Corporation will pay a dividend of $4.35 per share next year. The company pledges to increase its dividend by 5.5 percent per year, indefinitely. If you require a return of 9 percent on your investment, how much will you pay for the company's stock today? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Current stock price
If you own 14 shares of RoGu stock priced at $35.30 per shareand you purchased the stock at the price of $25.54 and the stock paid a dividend of $1.1, what was your return percentage. (Provide a percentage return in decimal format, a profit of 23.221%, should be written as 0.23221, please use at least 5 decimal places and do not use $ symbol in the answer) I
Suppose Acap Corporation will pay a dividend of $2.83 per share at the end of this year and $3.07 per share next year. You expect Acap's stock price to be $52.34 in two years. Assume that Acap's equity cost of capital is 10.7%. a. What price would you be willing to pay for a share of Acap stock today if you planned to hold the stock for two years? b. Suppose, instead, you plan to hold the stock for one year. For what price would you expect to be able to sell a share of Acap stock in one year? c. Given your answer in part b, what price would you be willing to pay for a share of Acap stock today if you planned to hold the stock for one year? How does this price compare to your answer in part a? a. If you planned to hold the stock for two years, the price you would pay for a share of Acap stock today is $ (Round to the nearest cent.)
Ninja Co. Will pay a dividend of $5.00, which will increase by 8 percent each year over the following three years and then grow at an annual rate of 6 percent forever. You expect a 11 percent return on your invested capital. What price would you pay for a share in this company? (Do not round "PV factor" and other intermediate calculations. Round the final answer to 2 decimal places. Omit $ sign in your response.)

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