How much will EVCO stock pay a dividend in one year?
Assume Evco, Inc. has a current stock price of $50.00 and will pay a $2.00 dividend in one year; its equity cost of capital is 15%. What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its current price?
What is assume EVCO's equity cost of capital?
Assume Evco, Inc. has a current stock price of $50 and will pay a $2 dividend in one year; its equity cost of capital is Chapter 7 Questions.docx - 4. Assume Evco, Inc. has a... This preview shows page 1 - 3 out of 13 pages.
How do you find the price of a stock in one year?
ANS: We can use Eq. (9.1) to solve for the price of the stock in one year given the current price of $50.00, the $2 dividend, and the 15% cost of capital. P0 = Div1 + P1 / 1 + rE P0 = Current market price for a share = $50.00 P1 = New market price = ?
What is the difference between IRR and NPV?
c) NPV is measuring value creation, while IRR is measuring return on investment. Because returns do not scale with different levels of investment, the two measures may give different rankings when the initial investments are different.
How much cash does Apple have in 2015?
In December 2015, Apple had cash of $38.07 billion, current assets of $76.22 billion, and current liabilities of $76.09 billion. It also had inventories of $2.45 billion.
How much does AFW pay dividends?
AFW plans to pay out 60% of its earnings in total, paying 40% as a dividend and using 20% to repurchase shares.
What is the best investment opportunity when picking the higher IRR?
The best investment opportunity when picking the higher IRR occurs for all discount rates higher than 8%.
Does Cooperton Mining cut its dividend?
Cooperton Mining just announced it will cut its dividend from $4.00 to $2.50 per share and use the extra funds to expand. Prior to the announcement, Cooperton's dividends were expected to grow at a 3.0% rate, and its share price was $50.00. With the planned expansion, Cooperton's dividends are expected to grow at a 5.0% rate. What share price would you expect after the announcement? (Assume that the new expansion does not change Cooperton's risk.) Is the expansion a good investment?