The expected dividend on common stock

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PriceSmart Shops has $50Min assets, $35 in debt, and $10M in common stock. The dividend preferred stock is $1.50 per share and its price is $25 and has a 5% commission. The expected dividend on common stock is $1.00 per share and its price is $20. The grown of common stock is 3.5% All of Price Smart's bonds are selling for $925 and have a future value of $1,000. The bonds have 5 years left until maturity and pay a 5% coupon semi-annually. The current tax rate is 34%. PriceSmart is considering the rights of a product to sell in their stores that costs $500,000. The investemnt is expected to generate $95,000 in the first year and then increase by 12% annually for the next four years. Assume all other information remains teh same. What is the discounted payback period for this investment?

Reference no: EM131180478

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