Sustainable growth rate of dividend-earnings in circumstancs

Assignment Help Financial Accounting

Reference no: EM131219686

Blue Skies’s management

Is investing at an expected return on equity of 10 percent, which is below the return of 12 percent that investors could expect to get from comparable securities.Suppose that Blue Skies’s existing assets generate earnings per share of $5.00.

a. Find the sustainable growth rate of dividends and earnings in these circumstances.

Assume a 60 percent payout ratio.

b. Find the new value of its investment opportunities. Explain why this value is negative despite the positive growth rate of earnings and dividends.

c. If you were a corporate raider, would Blue Skies be a good candidate for an attempted takeover?

Reference no: EM131219686

Questions Cloud

Prepare the stockholders equity section of the balance sheet : The following stockholders’ equity accounts, arranged alphabetically, are in the ledger of Eudaley Corporation at December 31, 2014. Prepare the stockholders’ equity section of the balance sheet at December 31, 2014.

Find the phase change undergone by its electric vector : A plane polarized electrodynamics wave travelling in a dielectric medium of refractive index 'n' is reflected at normal incidence from the surface of a conductor. Find the phase change undergone by its electric vector if the refractive index of th..

The new territory to maintain the firm current net income : Central Pennsylvania Limestone plans to market its product in a new territory. Management estimates that an advertising and promotion program costing $123,000 annually would be needed for the next two or three years. How many tons would have to be so..

Regarding alien and ethic profiling issues : Please write an essay regarding Alien and ethic profiling issues in Homeland Security. Please do atleast 10 to 15 pages including references and please no plagiarism.

Sustainable growth rate of dividend-earnings in circumstancs : Is investing at an expected return on equity of 10 percent, which is below the return of 12 percent that investors could expect to get from comparable securities.Suppose that Blue Skies’s existing assets generate earnings per share of $5.00. Find the..

Would the public be in favor of such an executive action : Does the president have the power to take this action without Congress? Is this really a state issue and not a federal issue? Is this executive action, in your opinion, a good idea, why or why not? Would the public be in favor of such an executive..

Explain what is establishing security controls : Explain what is Establishing Security Controls and why it is necessary for record keeping(e.g. what characteristics of records, recordkeeping systems or processes does it support?)

Charismatic leaders use active impression management : Part A: What is charismatic leadership? Part B: Explain what is meant by the statement that charismatic leaders use active impression management with their followers to support their image. Provide and elaborate on one example.

Prepare all necessary journal entry transactions : Prepare all necessary journal entry transactions along with the closing ones. Purchased inventory for 30,000 on account. Sold inventory costing 20,000 for 40,000 on account. Issued a check for 30,000 for the inventory purchased on account (#4 transac..

User Account

All Pages