United technologies has pound50 million in excess cash and

Reference no: EM13363957

United Technologies has £50 million in excess cash and no debt. The firm expects to generate additional free cash flows of £40 million per year in subsequent years and will pay out these future free cash flows as regular dividends. United's unlevered cost of capital is 10% and there are 10 million shares outstanding. United's board is meeting to decide whether to pay out its £50 million in excess cash as a special dividend or to use it to repurchase shares of the firm's stock.

i. What are United's enterprise and total market values?

ii. Consider that United uses the entire £50 million in excess cash to pay a special dividend. What will be the amount of the regular yearly dividends in the future?

iii. Consider that United uses the entire £50 million in excess cash to pay a special dividend. What is United's ex-dividend price?

iv. Consider that United uses the entire £50 million to repurchase shares. What will be the amount of the regular yearly dividends in the future?
Additional Requirements

Reference no: EM13363957

Questions Cloud

1you purchase a 20 year bond 1000 par value bond that pays : 1.you purchase a 20 year bond 1000 par value bond that pays 8 interest semi-annually that can be called in 10 years at

The sarbanes-oxley act changed the rules and practices of : the sarbanes-oxley act changed the rules and practices of the accounting profession drastically . discuss the changes

1 explain what was the markets reaction to the : 1. explain what was the markets reaction to the self-reported earnings announcement?2. briefly examine the reported

Question 1 briefly describe the meaning of the term : question 1 briefly describe the meaning of the term mechatronics both in terms of the systems approach and the

United technologies has pound50 million in excess cash and : united technologies has pound50 million in excess cash and no debt. the firm expects to generate additional free cash

Here is another assignment but this time just 4 questionsit : here is another assignment but this time just 4 questionsit is about verizon inc. corporationquestions1 evaluate the

Lealos inc is considering a change in its cash-only sales : lealos inc. is considering a change in its cash-only sales policy. the new terms of sale would be net one month. based

Jersey ts is preparing to sell new shares of stock to the : jersey ts is preparing to sell new shares of stock to the general public. as part of this process the firm just filed

The project requires you to gather information compile data : the project requires you to gather information compile data and examine a how the debt ceiling will impact the

User Account

All Pages