JINX Ltd. had earnings per share of $5 as at December 31, 2012, but paid no dividends.
Question:
JINX Ltd. had earnings per share of $5 as at December 31, 2012, but paid no dividends. Earnings were expected to grow at 15 percent per year for the following five years. JINX Ltd. will start paying dividends for the first time on December 31, 2017, distributing 50 percent of its earnings to shareholders. Earnings growth will be 6 percent per year for the next six years (that is, from January 1, 2018 through to December 31, 2023). Starting on December 31, 2023, JINX Ltd. will begin to pay out 80 percent of its earnings in dividends and earnings growth will stabilize at 2 percent per year in perpetuity. The required rate of return on TJINX stock is 10 percent. What should be the current share price of JINX?
Step by Step Answer:
Notation t 0 is December 31 2012 t 5 is December 31 20...View the full answer
Introduction To Corporate Finance
ISBN: 9781118300763
3rd Edition
Authors: Laurence Booth, Sean Cleary
Students also viewed these Corporate Finance questions
-
In 2010, Signal Communications Ltd. reported earnings per share of $0.34. Signal had 28.1 million common shares outstanding during 2010 and 2011, and no preferred shares. In 2011, Signal reported net...
-
In 2011, Pringle Company reported earnings per share of $9.50 when its stock was selling for $228. In 2012, its earnings increased by 13 percent. If all other relationships remain constant, what is...
-
In 2009, Drago Company reported earnings per share of $9.50 when its stock was selling for $228. In 2010, its earnings increased by 13 percent. If all other relationships remain constant, what is the...
-
50 Kg of ammonium sulphate (NH4)2SO4 and 30 Kg of urea CO(NH2)2 fertilizers were applied in two equal sizes of plots A and B to enrich their nitrogen content. Show by working which plot was more...
-
What is comprehensive income?
-
Apply the five criteria for effective targeting to marketing a product of your choice to college students.
-
Given the Irwin-Hall distribution with pdf, \[f_{Y}(y)=\frac{1}{2(n-1) !} \sum_{k=0}^{n}(-1)^{k}\left(\begin{array}{l}n \\k\end{array} ight)(y-k)^{n-1} \operatorname{sign}(y-k)\] where the sign...
-
Rockwall RV Centers accounting records include the following accounts at December 31, 2016. Cost of Goods Sold............$ 368,000 Accounts Payable............ 20,000 Rent Expense..................
-
Tracy is single and had adjusted gross income of $35,800 in 2018. Tracy also has the following items: How much may Tracy claim as itemized deductions?
-
A&B Enterprises is trying to select the best investment from two alternatives. Cash flows for each alternative are:Initial outlay $ 93,000 $ 93,000 Year Investment A Investment B 1 $7,000 $63,000...
-
TelTec Inc. stock is expected to sell for $10 per share four years from now. TelTec has just paid a dividend of 50 cents per share. Dividends are expected to grow at a rate of 5 percent per year for...
-
Karlyle Inc. has just paid a dividend of $4. An analyst forecasts annual dividend growth of 9 percent for the next five years; then dividends will decrease by 1 percent per year in perpetuity. The...
-
Control risk assessments for accounts receivable assertions depend on the related control risk assessments for the class of transactions. The classesof transactions that do not relate to the accounts...
-
You have been working as the controller of Fixzit Corporation for the past six years. Last week you had appointed a bright young student, Daye Bitt, from Konkord University as a work study intern for...
-
Sandia corporation is considering two mutually exclusive projects. For our purposes, we will call them projects A and B. Project A is expected to cost $54,655, and project B is expected to cost...
-
If a project costs $467,384, and has the cash flows outlined in the table below, what is this project's payback period in years (use two decimal places in your response)? Year 1 10,644 Year 2 111,939...
-
Calculate balance sheet financial analysis the : Current Ratio , Working Capital Leverage,A/R Turndays, Inventory Turndays, and Accounts payable turnover using balance sheet. Table A Condensed Income...
-
Participation and Teaching Assistanship. Attached below is the material on this subject. Please help me answer the question stated below.? PLANNING Planning is an integral part of successful...
-
This exercise will give you practice developing an EFE Matrix. An EFE Matrix summarizes the results of an external audit. This is an important tool widely used by strategists. Instructions Step 1...
-
An 8.0 kg crate is pulled 5.0 m up a 30 incline by a rope angled 18 above the incline. The tension in the rope is 120 N, and the crates coefficient of kinetic friction on the incline is 0.25. a. How...
-
A solid conducting sphere of radius \(R\) and carrying charge \(+q\) is embedded in an electrically neutral nonconducting spherical shell of inner radius \(R\) and outer radius \(2 R\). The material...
-
What is the firms goal with regard to cash collections? Describe each of the following types of collection systems: a. Field-banking system b. Mail-based collection system c. Electronic system
-
What is a lockbox system? How does it typically work? Briefly describe the economics involved in performing a cost-benefit analysis of such a system.
-
Briefly describe each of the following funds transfer mechanisms: Automated clearinghouse (ACH) debit transfer Wire transfer Why are wire transfers typically used only for high-dollar transfers?
-
I need to find out how to calculate the 3-year % rate of return. The information I have is a $10,000 investment and a 12-month yield percentage (1.138 for AB company, 1.894 for AIG company, 0.679 for...
-
Anna has an investment that will bring her $100 with a 30% probability and $40 with a 70% probability. Anna's Utility function is U = Y (1/2) . Where Y= income. Anna is considering selling this...
-
on January 1, 2000, the price of koka kola was $10. on jan and, 2020, the shares were worth $100. the stock Paid no dividends during the period. what is the annual geometric return.
Study smarter with the SolutionInn App