Principles of Corporate Finance
Principles of Corporate Finance
13th Edition
ISBN: 9781260465099
Author: BREALEY, Richard
Publisher: MCGRAW-HILL HIGHER EDUCATION
bartleby

Concept explainers

bartleby

Videos

Textbook Question
Book Icon
Chapter 4, Problem 33PS

DCF valuation Portfolio managers are frequently paid a proportion of the funds under management. Suppose you manage a $100 million equity portfolio offering a dividend yield (DIV1/P0) of 5%. Dividends and portfolio value are expected to grow at a constant rate. Your annual fee for managing this portfolio is .5% of portfolio value and is calculated at the end of each year. Assuming that you will continue to manage the portfolio from now to eternity, what is the present value of the management contract? How would the contract value change if you invested in stocks with a 4% yield?

Blurred answer
Students have asked these similar questions
Can you answer this question? Which type of bond offers tax advantages? A) Convertible bondsB) Municipal bondsC) Corporate bondsD) Junk bonds
I need help! Which of the following is a source of external finance? A) Retained earningsB) Bank loansC) Sale of assetsD) Cost cutting
Diversification in investing reduces which type of risk? A) Market riskB) Systematic riskC) Unsystematic riskD) Liquidity risk

Chapter 4 Solutions

Principles of Corporate Finance

Knowledge Booster
Background pattern image
Finance
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.
Similar questions
SEE MORE QUESTIONS
Recommended textbooks for you
Text book image
International Financial Management
Finance
ISBN:9780357130698
Author:Madura
Publisher:Cengage
Text book image
Pfin (with Mindtap, 1 Term Printed Access Card) (...
Finance
ISBN:9780357033609
Author:Randall Billingsley, Lawrence J. Gitman, Michael D. Joehnk
Publisher:Cengage Learning
Dividend disocunt model (DDM); Author: Edspira;https://www.youtube.com/watch?v=TlH3_iOHX3s;License: Standard YouTube License, CC-BY