Canadian Tire just announced that it plans to reduce its dividend from $2.50 to $1.50 per share and use the extra funds to expand its operations. Prior to this announcement, Canadian Tire.s dividends were expected to grow at 4% per year and Canadian Tire.s stock was trading at $25.00 per share. With the new expansion, Canadian Tire.s dividends are expected to grow at 8% per year inde.nitely. Assuming that Canadian Tire.s risk is unchanged by the expansion, the value of a share of Canadian Tire after the announcement is approximately: A) $25.00 B) $15.00 C) $31.25 D) $27.50 E) $29.75
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Canadian Tire just announced that it plans to reduce its dividend from $2.50 to $1.50 per share
and use the extra funds to expand its operations. Prior to this announcement, Canadian Tire.s dividends
were expected to grow at 4% per year and Canadian Tire.s stock was trading at $25.00 per share. With
the new expansion, Canadian Tire.s dividends are expected to grow at 8% per year inde.nitely. Assuming
that Canadian Tire.s risk is unchanged by the expansion, the value of a share of Canadian Tire after the
announcement is approximately:
A) $25.00
B) $15.00
C) $31.25
D) $27.50
E) $29.75
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- JRN Enterprises just announced that it plans to cut its next-year dividend, D₁, from $2.25 to $1.30 per share and use the extra funds to expand its operations. Prior to this announcement, JRN's dividends were expected to grow at 5% per year and JRN's stock was trading at $25.50 per share. With the new expansion, JRN's dividends are expected to grow at 10% per year indefinitely. Assuming that JRN's risk is unchanged by the expansion, the value of a share of JRN after the announcement is closest to: OA. $14.73 OB. $58.84 C. $34.00 D. $25.50JRN Enterprises just announced that it plans to cut its dividend from $2.50 to $1.50 per share and use the extra funds to expand its operations. Prior to this announcement, JRN's dividends were expected to grow at 4% per year and JRN's stock was trading at $25.00 per share. With the new expansion, JRN's dividends are expected to grow at 8% per year indefinitely. Assuming that JRN's risk is unchanged by the expansion, the value of a share of JRN after the announcement is closest to:Cooperton Mining just announced it will cut its dividend from $3.88 to $2.59 per share and use the extra funds to expand. Prior to the announcement, Cooperton's dividends wereCX Enterprises has the following expected dividends: $1.03in one year, $1.18 in two years, and $1.25 in three years. After that, its dividends are expected to grow at 4.4% per yearZoom Enterprises expects that one year from now it will pay a total dividend of $5.0 million and repurchase $5.0 millionworth of shares. It plans to spend $10.0 million on dividendsZoom Enterprises expects that one year from now it will pay a total dividend of S5.0 million and repurchase $5.0 million worth of shares. It plans to spend $10.0 million ondividends and repurchases every year after that forever, although it may not always be an even split between dividends and repurchases. If Zoom's equity cost of capital is 13.0% and it has 5.0 million shares outstanding, what is its shareprice today? The price per share is S. (Round to the…
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- Pimento Inc. estimates that this year’s earnings will be $75 million. There are 12 million shares outstanding at a price of $27.50 per share. Pimento had been following a 100% dividend payout policy until now but would now like to shift to the Residual Dividend policy for this year. Dividends from this year’s earnings are paid next year. a) What is the EPS and DPS for Pimento under the 100% dividend payout policy? b) If the planned capital outlay is for $72 million and the target capital structure is 1.5:1, willPimento be able to pay dividends as per the Residual Dividend Policy? If so, what will be the dividend per share? Investors require a 22.72% rate of return. Ignore taxes. c) IfPimento shifts from a 100% payout policy to the residual dividend policy, what impact will this have on its stock price, assuming the firm earns 22.72% as its ROE? Support your argument through relevant computations. Which argument of the dividend policy decision would you have demonstrated…Dalmatian Co. is currently paying a dividend of P2.20 per share. The dividends are expected to grow at 25% per year for the next four years and then grow 5% per year thereafter. Calculate the expected dividend in year 6. A. P5.37 B. P2.95 C. P5.92 D. P8.39Is my answer correct? I feel as if I am missing a few steps. AFW Industries has 201 million shares outstanding and expects earnings at the end of this year of $673 million. AFW plans to pay out 61% of its earnings in total, paying 34% as a dividend and using 27% to repurchase shares. If AFW's earnings are expected to grow by 8.9% per year and these payout rates remain constant, determine AFW's share price assuming an equity cost of capital of 12.1%. Formula is g = ROE x b Do the opposite of the formula G = 8.9%; payout is 61% (1 - .61 = .39) 9% - .39 = .89 -.39 = .5
- GMA corporation is preparing to issue common stock. The Chief Financial Officer is attempting to estimate GMR’s cost of new common stock. The next dividend is expected to be P4.25 and will be paid one year from now. The current market price reflects an 18% expected annual return on investors. Dividends are expected to grow at a constant 8% per year. Flotation costs on the new issue will be P 1.25 per share. GMR’s cost of new common stock is nearest: a. 18.30% b. 18.00% c. 19.25% d. 19.44%Saga TechInc. just paid a dividend of $4.00 per share (that is, DO=4.00) The dividends of SagaTech are expected to grow at a rate of 20 percent next year (that is, g1=.20) and at a rate of 10 percent the following year ( that is, g2=.10) Thereafter ( i.e., from year 3 to infinity) the growth rate in dividends is expected to be 5 percent per year. Assuming the required rate of return on Saga Tech, Inc. stock is 9 percent compute the current price of the stock . Record your answer as a dollar amount rounded to 2 decimal places , but do not include a dollar sign or any commas in your answer . For example , record $ 18,124.24985 as 18124.25 . Your Answer :Aluworks Co. is expected to pay a $21.00 dividend next year. The dividend will decline by 10 percent annually for the following three years. In year 5, Aluworks will sell off assets worth $100 per share. The year 5 dividend, which includes a distribution of some of the proceeds of the asset sale, is expected to be $60. In year 6, the dividend is expected to decrease to $40 and will be maintained at $40 for one additional year. The dividend is then expected to grow by 5 percent annually thereafter. If the required rate of return is 12 percent, what is the value of one share of Aluworks?