Question
In: Finance
Summit Systems has an equity cost of capital of 11.0%, will pay a dividend of $2.25...
Summit Systems has an equity cost of capital of 11.0%, will pay a dividend of $2.25 in one year, and its dividends had been expected to grow by 7.0% per year. You read in the paper that Summit Systems has revised its growth prospects and now expects its dividends to grow at a rate of 2.5% per year forever.
a. What is the drop in value of a share of Summit Systems stock based on this information?
b. If you tried to sell your Summit Systems stock after reading this news, what price would you be likely to get? Why?
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Summit Systems has an equity cost of capital of 11.5 % , will pay a dividend...
Summit Systems has an equity cost of capital of 11.5 % , will
pay a dividend of $1.00 in one year, and its dividends had been
expected to grow by 7.0 % per year. You read in the paper that
Summit Systems has revised its growth prospects and now expects its
dividends to grow at a rate of 2.5 % per year forever
a. What is the drop in value of a share of Summit Systems stock
based on this...
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how to convert monthly equity cost of capital to annually equity cost of capital
how to convert monthly equity cost of capital to annually equity
cost of capital
Estimating Cost of Equity Capital and Weighted Average Cost of Capital
Estimating Cost of Equity Capital and Weighted Average Cost of Capital
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Consolidated Statements of Income
Dollars in millions except per share amounts
2015
2014
Operating revenues
Service
$ 131,677
$ 118,437
Equipment
15,124
14,010
Total operating revenues
146,801
132,447
Operating expenses
Equipment
19,268
18,946
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