Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Question :
Alpha Ltd. - an 100% equity company - is following a payout ratio of 40% during the last several years. The financial managers of the company are now considering whether they should reduce the payout ratio to 20% (for dividend purpose) and use the remaining 20% for stock repurchase for the next year. It would like you to examine the impact of the change in policy on its stock prices after taking into the following facts.
(i) Before tax required rate of return by the equity shareholders is 15%
(ii) Current year EPS was Rs. 10 and the company has just paid a dividend of Rs. 4 per share.
(iii) Historical growth rate of EPS and dividend were 9%
(a) Compute the current market price of the stock before initiating such policy change.
(b) What will be the impact of the above policy change on the stock price? Compute the expected market price that will prevail after the announcement of policy change.
(c) Suppose the company has decided not to declare any dividend nor any stock repurchase. It retains all profits and re-invests in projects that offer 15% return.
What will be impact of such change in dividend policy on the stock price if dividends are taxed at 30% and capital gains are taxed at 10%?
Suppose that Oxford Inc. is interested in the two new products, AME and CGK. Because of its capital budget constraint, it can only launch one new product line. Eric just graduated
corporate finance
What is the annual rate of return on an investment in a common stock that cost $40.50 if the current dividend is $1.50 and the growth in the value of the shares and the dividend is
Financial Modelling Read carefully the case notes overleaf. Factor models on explaining firm's returns in a credit risk context. Is the usual one-factor model good enough?
This is an accounting term which is applicable to stockholders of closely going businesses. Accumulated earnings and profits are a company's net profits after subtracting distribut
You are a ceo of a sotware firm that has limited access to debt equity markets. The average return on last year projects is 28 % . and cost of capital is 12%. would npv pr Irr be
The Brazilian economy in 2001 and 2002 had gone up and down. The Brazilian "real" (R$) had also been declining since 1999 (when it was floated). Investors wished to
Question: (a) What are the differences and similarities between futures and forwards? (a) Distinguish between exchange traded instruments and over the counter instruments
a) The option to expand the capacity of a project can be viewed as owning what kind of option written on the underlying project? Explain b) The option to shutdown a proje
P/E Ratio: When it comes to valuing stocks, the price/earnings ratio is one of the highly oldest and most frequently used metrics. It is more than a measure of a company's past pe
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!
whatsapp: +91-977-207-8620
Phone: +91-977-207-8620
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd