An unlevered firm with assets valued at approximately

Assignment Help Financial Management

Reference no: EM13976239

Consider Toews, an unlevered firm with assets valued at approximately $1 billion. Toews has a current stock price of $10 per share, and also has a policy of not paying dividends. Next consider Jones, with 500 shares of Toews purchased 2 years ago at $13 per share. Jones would like to take some her investment in Toews outside the firm and wishes to create her own $750 dividend. If the capital gains rate is 20%, how much of the homemade dividend of $750 does Jones get to keep?

a. $700

b. $500

c. $150

d. $750

e. $600

Reference no: EM13976239

Questions Cloud

Calculating EAR : Friendly’s Quick Loan Inc., offers you “five for four, or I knock on your door.” This means you get $4 today and repay $5 when you get your paycheck in one week (or else), What’s the effective annual return Friendly’s earns on this lending business? ..

What should current rate be on two-year treasury securities : One year treasury bills currently earn 5.35 percent. You expect that one year from now, one year treasury bill rates will increase to 5.50 percent. The liquidity premium on two-year securities is 170 percent. If the liquidity theory is correct, what ..

EAR and Annuities-plan for retirement : You are helping your friend plan for her retirement. if interest rates are 12 percent per year, compounded quarterly, how much must she deposit into her retirement fund at the end of each month (in equal amounts per month) over the next 25 years, in ..

An unlevered firm with assets valued at approximately : Consider Toews, an unlevered firm with assets valued at approximately $1 billion. Toews has a current stock price of $10 per share, and also has a policy of not paying dividends. Next consider Jones, with 500 shares of Toews purchased 2 years ago at ..

Debt while maintaining its current equity and net income : Quixote Industries currently has $6 million in debt and $10 million in equity. Assume the firm uses some of its cash to decrease its debt while maintaining its current equity and net income. Which one of the following will decrease as a result of thi..

What is the operating cash flow : Ridiculousness, Inc., has sales of $40,000, costs of $20,000, depreciation expense of $1,500, and interest expense of $800. If the tax rate is 35 percent, what is the operating cash flow, or OCF? (Do not round intermediate calculations.)

What is this projects equivalent annual cost : A five-year project has an initial fixed asset investment of $265,000, an initial NWC investment of $21,000, and an annual OCF of −$20,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required re..

Company has been approached to bid on a contract : Your company has been approached to bid on a contract to sell 4,000 voice recognition (VR) computer keyboards a year for four years. Due to technological improvements, beyond that time they will be outdated and no sales will be possible. What bid pri..

User Account

All Pages