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House of Herring plans to pay the entire dividend early in January 2016. All corporate and personal taxes were repealed in 2014.
a. Other things equal, what will be house of herring's stock price after the planned dividend payout?
b. Suppose the company cancels the dividend and announces that it will use the money saved to repurchase shares. What happens to the stock price on the announcement date? Assume that investors learn nothing about the company's prospects from the announcement. How many shares will the company need to repurchase?
c. Suppose the company increases dividends to $5.50 per share and the issues new shares to recoup the extra cash paid out as dividends. What happens to the with and ex-dividend share prices? How many shares will need to be reissued? Again, assume investors learn nothing from the announcement about House of Herring's prospects.
The Niendorf Company produces tea kettles which it sells for $15 each. Fixed costs are $700,000 for output up to 400,000 units. Variable expenses $10 per kettle.
A. What is the EOQ? B. How many orders will be placed per year? C. What is the total carrying cost? D. What is the total ordering cost?
You are offered an annuity that will pay $10,000 a year for 10 years starting after 5 years have elapsed. If you seek an annual return of 8 percent, what is the maximum amount you should pay for the annuity.
Services United is considering a new project that requires an initial cash investment of $75,000. The project will generate cash inflows of $26,500, $32,700, $18,500, and $10,000 over each of the next four years, respectively. How long will it tak..
The price of stock will be either $60 or $80 at the end of year. Call options are available with 1 year to expiration. T-bills currently yield 5%.
In 1965, Warren Buffett get control of a New England textile business called Berkshire Hathaway for about $10 per share. Today the stock sells for around $135,000 a share and Mr. Buffett is the 2nd richest person in America.
The Altman Corporation has a debt ratio of 33.33%, and it requires to increase $100,000 to expand. Management feels that an optimal debt ratio would be 16.67%.
Describe the International Accounting Standards Board (IASB) and its purpose. What countries are subject to the IASB? How is the IASB the same or different from the FASB?
You are given the following data about a portfolio you are to manage. For the long-term you are bullish, but you think market may fall over the next month.
The marginal tax rate for Amsted is 35 percent. What is this project's incremental after-tax free cash flow for 2011?
He can afford to save $4,100 per month for the next 10 years. If he can earn a 10 percent EAR before he retires and a 7 percent EAR after he retires, how much will he have to save each month in years 11 through 30?
Suppose that in recent years, both expected inflation and the market risk premium have declined. Suppose also that all stocks have positive betas.
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