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In: Finance

1. Safety Dentistry stock trades at $30 per share. The company is contemplating a 3 for...

1. Safety Dentistry stock trades at $30 per share. The company is contemplating a 3 for 2 split. Assuming that the split will have no effect on the market value of its equity, what will be the company's stock price following the stock split? (express answer in dollars)

_______________

2. Marie Company is considering three independent projects, each of which requires a $4 million investment. The WAC is 11%. The estimated internal rate of return (IRR) is presented below:

Project D IRR = 14%
Project E IRR = 12%
Project F IRR = 10%

The company's optimal capital structure calls for 40% debt and 60% equity. Net income is expected to be $7,500,000. If Marie establishes its dividends from the residual model, what will be its payout ratio?

a. 18%

b. 27%

c. 45%

d. 36%

Thank you in advance for your help with these two questions...!!

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Expert Solution

jeff jeffy answered 1 year ago
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