Cease paying dividends forever

Assignment Help Financial Management
Reference no: EM13880651

Gruber Corp. pays a constant $8.00 dividend on its stock. The company will maintain this dividend for the next 11 years and will then cease paying dividends forever. If the required return on this stock is 10 percent, what is the current share price?

Reference no: EM13880651

Questions Cloud

Difference in buy term and invest the difference strategy : The "difference" in the buy term and invest the difference strategy is the difference in ______________ between term life insurance and whole life insurance. The primary reason life insurance policies have a savings element is to allow the
Identify the number of odd vertices : identify the number of odd vertices.
Assume the total cost of a college education : Assume the total cost of a college education will be $200,000 when your child enters college in 16 years. You presently have $73,000 to invest. What annual rate of interest must you earn on your investment to cover the cost of your child's college ed..
Create a solid communication plan for your change initiative : Create a plan for minimizing possible resistance to your change management plan. Elaborate on the relationship between resistance to change and communication. Create a solid communication plan for your change initiative
Cease paying dividends forever : Gruber Corp. pays a constant $8.00 dividend on its stock. The company will maintain this dividend for the next 11 years and will then cease paying dividends forever. If the required return on this stock is 10 percent, what is the current share price?
Calculate the stocks expected return and standard deviation : Risk and Return. A stock will provide a rate of return of either −18% or +26%. If both possibilities are equally likely, calculate the stock's expected return and standard deviation.
What level of pretax cost savings : A proposed cost-saving device has an installed cost of $640,000. The device will be used in a five-year project but is classified as three-year MACRS property for tax purposes. The required initial net working capital investment is $46,000, the margi..
If debt financing is used in a for-profit corporation : If debt financing is used in a for-profit corporation, more of a firm's operating income is available for distribution to investors (owners and creditors). The additional available operating income arises as a result of
Save money to meet three objectives : Bilbo Baggins wants to save money to meet three objectives. First, he would like to be able to retire 30 years from now with retirement income of $26,500 per month for 25 years, with the first payment received 30 years and 1 month from now.

Reviews

Write a Review

Financial Management Questions & Answers

  About the bond yields

Bond Yields. A bond with face value $1,000 has a current yield of 6% and a coupon rate of 8%. (LO6-1) a. If interest is paid annually, what is the bond’s price? b. Is the bond’s yield to maturity more or less than 8%?

  Discuss the proposition that differences in the performance

industry analysis please respond to the followingdiscuss the proposition that differences in the performance of various

  Assume that all interest received at the end of the period

You placed $8,173 in a saving account today that earns an annual interest rate of 10.41 percent, compounded semi-annually. How much will you have in this account at the end of 27 years? Assume that all interest received at the end of the period is re..

  What is the firms weighted average cost of capital

A firm has debt of $11.3, a leveraged firm value of $28.6, a pre-tax cost of debt of 9.2 percent, a cost of equity of 18.1 percent, and a tax rate of 34 percent. What is the firm's weighted average cost of capital? Show your answer to the nearest .1%..

  What is the companys rate of return on the purchase

A delivery company is expanding its fleet by five vans at a total cost of $100,000. Operating and maintenance costs for the new vehicles are projected to be $25,000/year for the next eight years. After eight years, the vans will be sold for a total o..

  Investment is expected to produce annual cash flows

An investment costs $3,500 today. This investment is expected to produce annual cash flows of $1,200, $1,400, $1,300 and $1,100, respectively, over the next four years. What is the internal rate of return on this investment?

  What is the securitys equilibrium rate of return

Determinants of Interest Rate for Individual Securities A particular security's default risk premium is 3.00 percent. For all securities, the inflation risk premium is 1.75 percent and the real interest rate is 2.75 percent. The security's liquidity ..

  What is the intrinsic value of this stock

Store Age Inc. recently paid its annual dividend ($1.00), and reported an ROE of 15%, of which 50% is paid as dividends. The stock has a beta of 1.00. The current risk-free rate is 2.10% and the market risk premium (RM - RF) is 9.00%. Assuming that C..

  How much are the annual payments

John Doeber borrowed $160,000 to buy a house. His loan cost was 6% and he promised to repay the loan in 15 equal annual payments. How much are the annual payments?

  Maintain a weighted average cost of capital

Webster's Watering Hole must maintain a weighted average cost of capital of 9% to satisfy covenants in the bond indenture. Analysts forecast the after tax cost of debt of 5% and a cost of equity of 11%. What debt-equity ratio must be employed to meet..

  What is the return on investment in life insurance

You purchase a $100,00 life insurance policy for a single payment of $35,000. If you want to earn 9 percent on invested funds, how soon must you die for the policy to have been the superior alternative? If you die within ten years, what is the return..

  Portfolio comprising of a $3 million

Consider a portfolio comprising of a $3 million investment in Ariel Ltd and a $5 million investment in in Snowy Ltd. Assume that the standard deviations of the returns for the shares are 0.4 and 0.25 respectively

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd