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- Problem 19-12 Homemade Dividends You own 1,100 shares of stock in Avondale Corporation. You will receive a dividend of $2.00 per share in one year. In two years, the company will pay a liquidating dividend of $75 per share. The required return on the company's stock is 20 percent. Suppose you want only $750 total in dividends the first year. What will your homemade dividend be in two years? (Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Homemade dividendQuestion 18 3.7 points Save Ans Assume that you own 100% of a company worth 12 million dirhams represented by 4 million shares of stock. Suppose you are now thinking about issuing additional shares of stocks to raise cash for expansion purposes. Therefore, you raise 6 million dirhams by selling an additional 2 million shares of stock at book value in the stock market. After the sale of the new shares of stock, you own of the company. And, if a year later heavy loses have decreased the value of the company by 25%, the new book value per share is O a. 66.7 percent - 2.25 dirham Ob.33.3 percent - 2.25 dirhams O. 62.5 percent - 1.6 dirhams Od. 66.7 percent- 1.6 dirhams Oe. 33.3 percent - 3.9 dirhamsQuestion 16 Growth Alley Productions pays no dividend at the present time. The company plans to start paying an annual dividend in the amount of R0,40 a share for two years commencing four years from today. After that time, the company plans on paying a constant R0,75 a share annual dividend indefinitely. How much are you willing to pay to buy a share of this stock today if your required return is 11,60%? 1. R 4,23 2. R 6,51 3. R 8,78 4. R10,34
- Problem 11-8 Real versus Nominal Returns (LO2) You purchase 100 shares of stock for $50 a share. The stock pays a $4 per share dividend at year-end. a. What is the rate of return on your investment if the end-of-year stock price is (1) $46; (i) $50; (ii) $55? b. What is your real (inflation-adjusted) rate of return if the inflation rate is 6%? Complete this question by entering your answers in the tabs below. Required A Required B What is the rate of return on your investment if the end-of-year stock price is (i) $46; (i) $50; () $55? Note: Leave no cells blank - be certain to enter "0" wherever required. Enter your answers as a whole percent. Stock Price: 46 50 55 Rate of Return % %Problem 17-26 Payout Policy and Taxes (LO4) Good Values Inc. is all-equity-financed. The total market value of the firm currently is $140,000, and there are 4,000 shares outstanding. Ignore taxes. a. The firm has declared a $5 per share dividend. The stock will go ex-dividend tomorrow. At what price will the stock sell today? b. At what price will the stock sell tomorrow? c. Now assume that the tax rate on all dividend income is 30% and the tax rate on capital gains is zero. At what price will the stock sell today, taking account of the taxation of dividends? (Do not round intermediate calculations. Round your answer to 2 decimal places.) d. Now suppose that instead of paying a dividend, Good Values plans to repurchase $14,000 worth of stock. What will be the stock price before the repurchase? e. What will it be after the repurchase? f. Does the existence of taxes tend to favor dividends or repurchases? Answer is not complete. a. Stock price $ 35 O b. Stock price $ 30 O Stock price $…Problem 9.6 Nynet, Inc., paid a dividend of $4.40 last year. The company's management does not expect to increase its dividend in the foreseeable future. If the required rate of return is 19.0 percent, what is the current value of the stock? (Round answer to 2 decimal places, e.g. 15.25.) Current value Click if you would like to Show Work for this question: Open Show Work
- QUESTION 17 Suppose you purchase one share of the stock of Cereal Correlation Company at the beginning of year 1 for $50. At the end of year 1, you receive a $1 dividend and buy one more share for $72. At the end of year 2. you receive total dividends of $2 (.e. $1 for each share) and sell the shares for $67.20 each The time-weighted return (geometric) on your investment is O 10.06%. O 8.77%. 19.73%. 17.60%.QUESTION FIVE A. A stock originally sold for K25 per share and ten years later, now sells for K40.The dividend last paid was K10. Find the Dividend yield and capital gains yield and total yield or return? B. Tomorrow Investments Ltd. just paid a divided of K2.00 in 2019 and the dividend is expected to grow at 15% for the next 3years and thereafter decline to 10%. The required rate of return on the stock is 18%. Find the value of the stock. C. The Blue Dog Company has common stock outstanding that has a current price of $20 per share and a $0.5 dividend. Blue Dog’s dividends are expected to grow at a rate of 3% per year, forever. The expected risk-free rate of interest is 2.5%, whereas the expected market premium is 5%. The beta on Blue Dog’s stock is 1.2. What is the cost of equity for Blue Dog using the dividend valuation model and What is the cost of equity for Blue Dog using the capital asset pricing? model? [Problem 7-8 Dividend Discount Model (LO2) Rework Table 7.4 for horizon years 1, 2, 3, and 10, assuming that investors expect the dividend and the stock price to increase at only 6% a year and that each investor requires the same 12 % expected return. The company will pay a dividend of $2.40 at the end of the first year. What value would an investor place on the stock? Note: Do not round intermediate calculations. Round your answers to 2 decimal places. Horizon (years) 1 2 3 10 PV (Dividends) $ 2.14 Answer is not complete. PV (Terminal Price) Value per Share $ 40.00 40.31 40.00 40.00
- Question 3 Steady As She Goes Inc. will pay a year-end dividend of $3 per share. Investors expect the dividend to grow at a rate of 4% indefinitely. (LO7-2) a. If the stock currently sells for $30 per share, what is the expected rate of return on the stock? b. If the expected rate of return on the stock is 16.5%, what is the stock price?Problem 7-8 Dividend Discount Model (LO2) Rework Table 7.4 for horizon years 1, 2, 3, and 10, assuming that investors expect the dividend and the stock price to increase at only 6% a year and that each investor requires the same 12% expected return. The company will pay a dividend of $3 at the end of the first year. What value would an investor place on the stock? Do not round intermediate calculations. Round your answers to 2 decimal places. Horizon (years) 1 2 3 10 PV (Dividends) $ PV (Terminal Price) 2.68 $ 5.26 75.00 Value per ShareProblem 7-8 Dividend Discount Model (LO2) Rework Table 7.4 for horizon years 1, 2, 3, and 10, assuming that investors expect the dividend and the stock price to increase at only 6% a year and that each investor requires the same 12% expected return. The company will pay a dividend of $3 at the end of the first year. What value would an investor place on the stock? Do not round intermediate calculations. Round your answers to 2 decimal places. Horizon (years) 1 2 3 10 PV (Dividends) PV (Terminal Value per Price) Share