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4. You have been watching XYZ Corp. as a possible investment. You are convinced that XYZ's long run target payout is approximately 60% of its long run earnings. You also noticed that the firm tends to follow Lintner's "partial adjustment dividend model", and that the partial adjustment coefficient tends to be about 30%. Last year it paid out $0.60on earnings of $1.20. The firm announces that it will pay $0.60 on earnings of $1.25 for the current year. (a) What is your guess regarding management's perception of the firm's long-run earnings (rounded to the nearest cent)? (b) What do you think would happen to the stock price if the firm, instead of paying the dividend per share of $0.60, the firm announced a repurchase of shares through open market purchases of approximately the same aggregate amount? (c) The following year, the firm announces an annual dividend of $.61 on earnings of $1.10. What is your revised estimate of long run earnings?
A equipment originally had an estimated useful life of 5 years, but after 3 complete years, it was decided that the original estimate of useful life should have been ten years.
can you create a matrix which describes characteristics of fixed income and common stock securities? on top of the
If market interest rates are currently 15 percent and your investment provides you this 15 percent return, does that imply that you are 15% more wealthy.
Assume debt tax shields have a net value of $0.25 per dollar of interest paid. Calculate the project's APV.
A $1,000 corporate bond with 10 years to maturity pays a coupon of 8% (semi-annual) and the market required rate of return is a) 7.2% and b) 10%. What is the current selling price for a) and b)?
If the store owner decided to bargain with the mall's owner over the new lease payment, what new lease payment would make the store owner indifferent between the new and old leases?
In order to receive $12,000 at the end of three years and $10,000 at the end of five years, how much must be invested now if you can earn 14 percent rate of return?
Calculate the expected return of Escapist. (Negative values should be indicated by a minus sign.)
invested for total 6 years at 6% compounded semi-annually for first four years followed by 12%compounded quarterly for final 2 years.
kohers inc. is considering a leasing arrangement to finance some manufacturing tools that it needs for the next 3
differentiate between qualitative and quantitative methods of research.explain commonly used qualitative research
Outstanding debt of Home Depot trades with a yield to maturity of 6%. The tax rate of Home Depot is 40%. What is the effective cost of debt of Home Depot?
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