Question
In: Finance
you own 1000 shares of stock in avondale corporation. you will receive a $3.15 per sahre...
you own 1000 shares of stock in avondale corporation. you will receive a $3.15 per sahre dividend in one year. in two years, the company will pay a liquidating dividend of $57 per share. the required return on the company's stock is 15 percent. ignoring taxes, what is the current share price of your stock? if you would rather have equal dividends in each of the next two years, how many shares would you sell in one year? what would your cash flow be for each year for the next two years? hint: dividends will be in the form of an annuity
Solutions
jeff jeffy answered 7 months agoRelated Solutions
You own 1,100 shares of stock in Avondale Corporation. You will receive a $2.00 per share...
You own 1,100 shares of stock in Avondale Corporation. You will
receive a $2.00 per share dividend in one year. In two years, the
company will pay a liquidating dividend of $75 per share. The
required return on the company's stock is 20 percent.
a.
Ignoring taxes, what is the current share price of your stock?
(Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)(Show work)
b.
If you would rather have equal...
You own 1,100 shares of stock in Avondale Corporation. You will receive a $1.80 per share...
You own 1,100 shares of stock in Avondale Corporation. You will
receive a $1.80 per share dividend in one year. In two years, the
company will pay a liquidating dividend of $45 per share. The
required return on the company's stock is 20 percent.
a.
Ignoring taxes, what is the current share price of your stock?
(Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)
b.
If
you would rather have equal dividends...
You own 1,100 shares of stock in Avondale Corporation. You will receive a $2.00 per share...
You own 1,100 shares of stock in Avondale Corporation. You will
receive a $2.00 per share dividend in one year. In two years, the
company will pay a liquidating dividend of $48 per share. The
required return on the company's stock is 20 percent. a. Ignoring
taxes, what is the current share price of your stock? (Do not round
intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.) b. If you would rather have equal dividends
in...
You own 1,000 shares of stock in Avondale Corporation. You will receive $3.115 per share cash...
You own 1,000 shares of stock in Avondale Corporation.
You will receive $3.115 per share cash dividend in one year. In two
years, the company will pay a liquidating dividend of $57 per
share. The required return on the company’s stock is 15 percent.
What is the current price of your stock? (Ignore taxes). If you
would rather have equal dividends in each of the next two years,
show how you can accomplish this by creating homemade dividends
(Hint: dividends...
You own 1,000 shares of stock in Avondale Corporation. You will receive a dividend of $2.90...
You own 1,000 shares of stock in Avondale Corporation. You will
receive a dividend of $2.90 per share in one year. In two years,
the company will pay a liquidating dividend of $59 per share. The
required return on the company's stock is 14 percent.
a. Ignoring taxes, what is the current share price of your
stock? (Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)
b. If you would rather have equal dividends...
You own 1,100 shares of stock in Avondale Corporation. You will receive a dividend of $1.50...
You own 1,100 shares of stock in Avondale Corporation. You will
receive a dividend of $1.50 per share in one year. In two years,
the company will pay a liquidating dividend of $45 per share. The
required return on the company's stock is 20 percent.
a.
Ignoring taxes, what is the current share price of your stock?
(Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)
b.
If you would rather have equal...
You own 1,650 shares of stock in Avondale Corporation. You will receive a dividend of $1.50...
You own 1,650 shares
of stock in Avondale Corporation. You will receive a dividend of
$1.50 per share in one year. In two years, the company will pay a
liquidating dividend of $54 per share. The required return on the
company's stock is 20 percent.
a.
Ignoring taxes, what
is the current share price of your stock? (Do not round
intermediate calculations and round your answer to 2 decimal
places, e.g., 32.16.)
b.
If you would rather have equal...
You own 1,100 shares of stock in Avondale Corporation. You will receive a dividend of $2.60...
You own 1,100 shares of stock in Avondale Corporation. You will
receive a dividend of $2.60 per share in one year. In two years,
the company will pay a liquidating dividend of $48 per share. The
required return on the company's stock is 20 percent.
a.
Ignoring taxes, what is the current share price of your stock?
(Do not round intermediate calculations and round your
answer to 2 decimal places, e.g., 32.16.)
b.
If you would rather have equal...
You own 100 shares of stock of unlevered Gamma Company which has 1000 shares outstanding. Gamma...
You own 100 shares of stock of unlevered Gamma Company which has
1000 shares outstanding. Gamma plans to pay $2,200 dividend at the
end of the current year (i.e. one year from today) and a
liquidating dividend of $4,840 at the end of 2 years from today.
The required return on Gamma’s stock is 10 percent. Ignoring taxes,
and transaction costs.
a. What is the value of your shares of
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b. Suppose shareholders...
You own 100 shares of stock of unlevered Gamma Company which has 1000 shares outstanding. Gamma...
You own 100 shares of stock of unlevered Gamma Company which has
1000 shares outstanding. Gamma plans to pay $2,200 dividend at the
end of the current year (i.e. one year from today) and a
liquidating dividend of $4,840 at the end of 2 years from today.
The required return on Gamma’s stock is 10 percent. Ignoring taxes,
and transaction costs.
a. What is the value of your shares of
stock? Show calculations to support your answer.
b. Suppose shareholders...
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