User Account

All Pages

What is the price of a share of IJK stock

Assignment Help Financial Accounting
Reference no: EM132969632

Question - The IJK Corporations will pay a constant dividend of $2 per share per year in perpetuity. Assume all investors pay a 20% tax on dividends and that there is no capital gains tax. The cost of capital for investing in IJK is 12%.

-What is the price of a share of IJK stock? 

-You notice that the stock price drop on the ex-dividend date is about the size of the dividend payment. You find this relationship puzzling given that the tax disadvantage of dividends. Explain what might account for this stock price trend. 

-Assume that management makes a surprise announcement that IJK will no longer pay dividends but will use the cash to repurchase stock instead. What is the price of IJK stock now?

Reference no: EM132969632

Questions Cloud

Which items would de recognise as subsequent expenditure : Which items would DE recognise as subsequent expenditure on a non-current asset and capitalise it as required by IAS 16 Property, Plant and Equipment?
Record the transaction of mr mohit in a cash book : Question - Record the following transaction of Mr. Mohit in a cash book with cash and bank 10 column for the month of May 2019
What is total current assets in dollars : What is total Current Assets in dollars? A property management business had the account balances on January 31, 2020 after all the year-end.
What amount of gain should be reported : The land was purchased by the donor for $8,000. The land is sold for $6,000. What amount of gain should be reported
What is the price of a share of IJK stock : The IJK Corporations will pay a constant dividend of $2 per share per year in perpetuity. What is the price of a share of IJK stock
What amount appear under cash flows from financing activity : What amount will appear under 'cash flows from financing activities in the statement of cash flows of for the year ended 30 September 20X2
What is the total amount to be included in closing inventory : What is the total amount to be included in closing inventory for these 2 items? The information relates to inventory held at the year-end.
Should bart simpson funtime manufacturing sell skateboards : Should Bart Simpson FunTime Manufacturing sell the skateboards in unfinished form or process them further prior to selling? Why?
What procedures might be used to ensure updating of records : What procedures might be used to ensure the updating of records and systems in line with salary reviews and other changes in employment status?

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd