Company Q's current return on equity (ROE) is 13%. It pays out 45 percent of earnings as cash dividends (payout ratio = 0.45). Current book value per share is $63. Book value per share will grow as Q reinvests earnings. Assume that the ROE and payout ratio stay constant for the next four years. After that, competition forces ROE down to 11.0% and the payout ratio increases to 0.75. The cost of capital is 11.0%. a. What are Q's EPS and dividends in years 1, 2, 3, 4, and 5? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Year 1 2 3 4 5 EPS Dividends b. What is Q's stock worth per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Stock worth per share
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- Company Q’s current return on equity (ROE) is 16%. It pays out 60 percent of earnings as cash dividends (payout ratio = 0.60). Current book value per share is $62. Book value per share will grow as Q reinvests earnings. Assume that the ROE and payout ratio stay constant for the next three years. After that, competition forces ROE down to 12.5% and the payout ratio increases to 0.70. The cost of capital is 11%. What is Q’s stock worth per share? Multiple Choice $103.9 $91.7 $98.4 $85.6 $105.7Company Q’s current return on equity (ROE) is 16%. It pays out 60 percent of earnings as cash dividends (payout ratio = 0.60). Current book value per share is $57. Book value per share will grow as Q reinvests earnings.Assume that the ROE and payout ratio stay constant for the next four years. After that, competition forces ROE down to 12.5% and the payout ratio increases to 0.70. The cost of capital is 12.5%.a. What are Q’s EPS and dividends in years 1, 2, 3, 4, and 5? (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. What is Q’s stock worth per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.)Company Q's current return on equity (ROE) is 20%. It pays out 45 percent of earnings as cash dividends (payout ratio 0.45). Current book value per share is $56. Book value per share will grow as Q reinvests earnings. Assume that the ROE and payout ratio stay constant for the next two years. After that, competition forces ROE down to 10.0% and the payout ratio increases to 0.80. The cost of capital is 11.0%. Question: What is Q's stock worth per share? O 106.1 O 121.7 O 111.6 118.2 O 74.9
- Company Q's current return on equity (ROE) is 14%. It pays out 60 percent of earnings as cash dividends (payout ratio = 0.60). Current book value per share is $70. Book value per share will grow as Q reinvests earnings. Assume that the ROE and payout ratio stay constant for the next four years. After that, competition forces ROE down to 12.5% and the payout ratio increases to 0.90. The cost of equity is 12.5%. What are Q's EPS and dividends in years 1, 2, 3, 4, and 5? What is Q's stock worth per share?Barton Industries expects next year's annual dividend, D1, to be $2.40 and it expects dividends to grow at a constant rate g = 4.4%. The firm's current common stock price, P0, is $21.40. If it needs to issue new common stock, the firm will encounter a 5% flotation cost, F. Assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. What is the flotation cost adjustment that must be added to its cost of retained earnings? Do not round intermediate calculations. Round your answer to two decimal places. % What is the cost of new common equity considering the estimate made from the three estimation methodologies? Do not round intermediate calculations. Round your answer to two decimal places. %A company will produce $3.00 in earnings per share at the end of the year. Reinvested earnings can produce a 14% return on equity. What is the PVGO if the company decides on a 30.0% plowback policy? Assume that investors have a 9.0% required rate of return. a. $10.42 b. $12.56 c. $13.86 d. $15.56
- Barton Industries expects next year's annual dividend, D1, to be $1.80 and it expects dividends to grow at a constant rate gL = 4.9%. The firm's current common stock price, P0, is $20.50. If it needs to issue new common stock, the firm will encounter a 4.2% flotation cost, F. Assume that the cost of equity calculated without the flotation adjustment is 12% and the cost of old common equity is 11.5%. What is the flotation cost adjustment that must be added to its cost of retained earnings? Round your answer to 2 decimal places. Do not round intermediate calculations.% What is the cost of new common equity? Round your answer to 2 decimal places. Do not round intermediate calculations.%**Please solve using Excel and show formulas.** Company Q’s current return on equity (ROE) is 16%. It pays out 50 percent of earnings as cash dividends (payout ratio = 0.50). Current book value per share is $42. Book value per share will grow as Q reinvests earnings. Assume that the ROE and payout ratio stay constant for the next two years. After that, competition forces ROE down to 8% and the payout ratio increases to 0.90. The cost of capital is 15%. Question: What is Q’s stock worth per share? (Choose the option closest to your answer) Multiple Choice $33 $41 $36 $44 $39Barton Industries expects next year's annual dividend, D1, to be $2.00 and it expects dividends to grow at a constant rate gL = 4.9%. The firm's current common stock price, P0, is $25.00. If it needs to issue new common stock, the firm will encounter a 4.0% flotation cost, F. Assume that the cost of equity calculated without the flotation adjustment is 12.9% and the cost of old common equity is 12.4%. What is the flotation cost adjustment that must be added to its cost of retained earnings? Do not round intermediate calculations. Round your answer to two decimal places. % What is the cost of new common equity considering the estimate made from the three estimation methodologies? Do not round intermediate calculations. Round your answer to two decimal places. %
- Barton Industries expects next year's annual dividend, D1, to be $2.30 and it expects dividends to grow at a constant rate g = 4.9%. The firm's current common stock price, P0, is $25.00. If it needs to issue new common stock, the firm will encounter a 4.5% flotation cost, F. What is the flotation cost adjustment that must be added to its cost of retained earnings? Do not round intermediate calculations. Round your answer to two decimal places. _____% What is the cost of new common equity considering the estimate made from the three estimation methodologies? Do not round intermediate calculations. Round your answer to two decimal places. _____%Soju Ltd is currently trading at $39, and recently paid an annual dividend of $4.5. If it is expected to pay annual dividends and maintain a retention ratio of 30% and a ROE of 8% (annually), what is the required rate of return per year based on the market price? O 11.82% O 14.55% O 11.54% O 13.94% O 14.22%Sidman Products’s common stock currently sells for $60.00 ashare. The firm is expected to earn $5.40 per share this year and to pay a year-end dividendof $3.60, and it finances only with common equity.a. If investors require a 9% return, what is the expected growth rate?b. If Sidman reinvests retained earnings in projects whose average return is equal tothe stock’s expected rate of return, what will be next year’s EPS?