A firm has a market value equal to its book value. Currently, the firm has excess cash of $7,500 and other assets of $23,500. Equity is worth $31,000. The firm has 500 shares of stock outstanding and net income of $3,000. What will the stock price per share be if the firm pays out its excess cash as a cash dividend? $50 $53 $59 $47

A firm has a market value equal to its book value. Currently, the firm has excess cash of $7,500 and other assets of $23,500. Equity is worth $31,000. The firm has 500 shares of stock outstanding and net income of $3,000. What will the stock price per share be if the firm pays out its excess cash as a cash dividend? $50 $53 $59 $47

Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)

8th Edition

ISBN:9781285065137

Author:Eugene F. Brigham, Joel F. Houston

Publisher:Eugene F. Brigham, Joel F. Houston

Chapter8: Risk And Rates Of Return

Section: Chapter Questions

Problem 6DQ

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A firm has a market value equal to its book value, excess cash of $1,000, and equity worth $20,800. The firm has 6,000 shares of stock outstanding and net income of $31,200. What will the new earnings per share be if the firm uses its excess cash to complete a stock repurchase? $4.10 $4.68 $6.56 $5.46
Question 4Brightland Inc. has a market value equal to its book value. Currently, the firm has excess cash of $1,500, other assets of $5,800, and equity valued at $5,000. The firm has 250 shares of stock outstanding and net income of $500. What will the new earnings per share be if the firm uses 30 percent of its excess cash to complete a stock repurchase? Question 5In the absence of market imperfections and taxes, stock repurchases are same as cash dividends. How does this change in real world circumstances and what effect does a stock repurchase announcement have on stock price?
8. Assume IBM just paid a dividend of £4.50 and expects these dividends to grow at 8% a year. The ex-div price of IBM is £100 per share. What is IBM's cost of equity capital? A. 3.86% B. 8% C. 12.22% D. 12.86%
Question 14 Wisteria Co. has a beat of 1.6. If the risk-free rate is 4% and the market return is 12%, what is its cost of equity assume CAPM? 17.2% 18.5% O 15.8% O 16.8% Question 15 The preferred stock of Sunflower Co. pays an annual dividend of $5.25 a share and sells for $70 a share. What is the firm's cost of preferred stock? O 7.50 percent O 8.00 percent O 5.24 percent O 6.48 percent
8. Dividend yield is the amount of money that an investor typically gets back through dividends. Which of these is a typical dividend yield for any company? Hint 0.00000003% O 300% 100% 3%
QUESTION 17 Assume the firm has a constant dividend payout ratio and a projected sales increase of 10 percent. All costs, assets, and current liabilities vary directly with sales. The firm is currently at full production. What is the external financing need? Currently, the firm's sales =$4,700, net income is $420, total assets=7890, dividends=125, A/P =790, LTD= 3130, and common stock 2780, and the Balance-sheet retained=1190. $462.00 O $385.50 $324.50 O $137.50
Question 10 (2 points) A firm has 1 million shares outstanding. After-tax earnings have been constant at $5 per share. The firm retains 40% of earnings and pays out the rest in dividend. The shareholder's required rate of return is 15%. Calculate the current share price. $50 $20 $30 $10 $40
QUESTION 7 CCB plc has just declared a dividend of 15p per ordinary share. Given that the company's shareholders require a return of 12% per year and that they expect future dividends to grow at an annual rate of 6%, what is the ex div share price predicted by the dividend growth model? O A. £2.65 O B. £2.50 OC. £3.53 OD.£1.25 O E. £2.57
QUESTION 19 Use the corporate valuation model to find the intrinsic value of a firm with a long-run growth in FCF of 5.75% and a WACC of 8.12%. The firm has $45 million in debt and preferred stock and has 4.5 million shares of common stock. The FCF for the first 4 years are (in millions of dollars): -$15, $12, $14, $19. OA. $63.90 B. $84.60 OC. $132.61 OD. $154.33
A company currently reported dividend of $12. It is expected that will reinvest 50% of its earnings perpetually. The return on equity of the company is 20% and remains unchanged in the future. Suppose the cost of equity of the company is 13%, what is the fair price of the stock based on the dividend discount model? A. $200 В. S220 C. $400 D. $440
Question Suppose a firm raises $23 million dollars by issuing debt at a cost of 6.1%, raises $14 million by issuing common stock at a cost of 8.6% and raises an additional $10 million by issuing preferred stock at a cost of 10.7%. What is the average cost of capital per dollar raised (this is similar to the concept of weighted average cost of capital in your finance classes)? (please round your answer to 1 decimal place)
Q4 NoGrowth Corporation currently pays a dividend of $0.59per quarter, and it will continue to pay this dividend forever. What is the price per share of NoGrowth stock if the firm's equity cost of capital is 16.9%?