Would your answer be different for the previous problem if JC Automobiles were a large firm followed by thirty-five analysts? Why or why not?
Answer to relevant QuestionsWeeMart, a retailer of children’s clothes, announces cut in dividends following a year in which both revenues and earnings dropped significantly. How would you expect its stock price to react? Explain. InTech, a computer software firm that has never paid dividends before, is considering whether it should start doing so. This firm has a cost of equity of 22% and a cost of debt of 10% (the tax rate is 40%). The firm has $100 ...Between 1988 and 2013, we saw an increase in the percentage of cash returned to stockholders in the form of dividends. Why? Lube Oil, in Question 3, paid a dividend of $20 million and bought back $25 million in stock. Estimate how much the cash balance of the firm changed during the year. The following were the P/E ratios of firms in the aerospace/defense industry with additional data on expected growth and risk: a. Estimate the average and median P/E ratios. What, if anything, would these averages tell ...
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