The new cash flows., Finance Basics

Tank Industries Washers decides to pay the following dividends over the next four years: $2.50, $3.20, $4.75 and $5.20 respectively (starting at time 1).

a.    After year 4, the firm decides a constant growth rate of 3%.  If investors needs 11%, what is the present share price?

b.    The CEO, main Payne, has identified various new investment opportunities.  He is trying to convince investors to back his strategy.  He would need to keep the dividends at $2.50 each year for the next four years. After year 4, the growth rate would be 10% forever.  Based on the increased risk, the other investors increase the needed return to 15%.  Should they back his strategy? Hint: Re-estimate the present price based on the new cash flows.

Posted Date: 3/18/2013 8:57:18 AM | Location : United States







Related Discussions:- The new cash flows., Assignment Help, Ask Question on The new cash flows., Get Answer, Expert's Help, The new cash flows. Discussions

Write discussion on The new cash flows.
Your posts are moderated
Related Questions
Define the term- Origination Origination offers to the work of investigation, analysis and processing of new project proposals. Origination starts before an issue is really

Give an example of how capital budgeting decisions affect a company's value, strategy or operations. Companies always tend to look for capex projects which will add value to

How are earnings calculated for the Pe ratio?

Using the data provided in Appendix 1 prepare an analysis for the attention of the directors of Meridian Ltd. The analysis should highlight the strategic differences between the co

Political Factors and Technological Factors - Investment Decisions i) Political factors - Under conditions of political uncertainty, that decisions cannot be completed as it

Valuation of Business A business may be valued for different type of reasons that as for merger, acquisition, or takeover or liquidation or outright sale.  During purchasing a

The partners are still unhappy about one of the features of your analysis, namely your assumption that the coupon rate of the bond is equal to 6% per annum. Their thinking is that

The following NPV's have been calculated to determine if a compressor installation should be accelerated from Year 3 to Year 7. The compressor cost is $1,500,000.   a. C

I need help with financial econometric questions, i got stuck in finding answers for my homework, Can you provide engineering level financial econometric homework help? I need expe

Cost of Finance - Capital Structure This is the price the company pays to retail and acquire finance. To get finance a company will pay implicit costs that are commonly recogn