Question: House of Haddock has 5,020 shares outstanding and the stock price is $142. The company is expected to pay a dividend of $22 per

share next year and thereafter the dividend is expected to grow indefinitely

by 3% a year. The president, George Mullet, now makes a surprise

House of Haddock has 5,020 shares outstanding and the stock price is $142. The company is expected to pay a dividend of $22 per share next year and thereafter the dividend is expected to grow indefinitely by 3% a year. The president, George Mullet, now makes a surprise announcement: He says that the company will henceforth distribute half the cash in the form of dividends and the remainder will be used to repurchase stock. The repurchased stock will not be entitled to the dividend. a-I. What is the total value ofthe company before the announcement? a-2. What is the total value of the company after the announcement? a-3. What is the value of one share? b. What is the expected stream of dividends per share for an investor who plans to retain his shares rather than sell them back to the company? Check your estimate of share value by discounting this stream of dividends per share. Complete this question by entering your answers in the tabs below. Req A1 to A3 Req a a-I. a-2. a-3. a-I a-2 a-3 What is the total value of the company before the announcement? What is the total value of the company after the announcement? What is the value of one share? Total value before announcement Total value after announcement Value per share s 712,840 712,840 142 Req A1 to A3 Req B

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

One model A1100 Kawasaki Jet Ski Personal Watercraft was sold for cash. This model retails for $9,375.00 plus 8% sales tax ($9,375.00 x 8% = $750.00). Invoice Number: G4011. Because a perpetual...

(a) ABC company will pay dividend $20 per share next year and will increase the dividend by 5% per year thereafter. The required return on this stock is 12%, what is the current share price by Gordon...

please answer all the question Question 4 (14 marks) (a) ABC company will pay dividend $20 per share next year and will increase the dividend by 5% per year thereafter. The required return on this...

Question 4 (14 marks) (a) ABC company will pay dividend $20 per share next year and will increase the dividend by 5% per year thereafter. The required return on this stock is 12%, what is the current...

House of Haddock has 5,020 shares outstanding and the stock price is $142. The company is expected to pay a dividend of $22 per share next year and thereafter the dividend is expected to grow...

HELP! Only need to solve the expected dividend of year 2. Thanks in advance. House of Haddock has 5,020 shares outstanding and the stock price is $142. The company is expected to pay a dividend of...

Hors dAge Cheeseworks has been paying a regular cash dividend of $4.30 per share each year for over a decade. The company is paying out all its earnings as dividends and is not expected to grow....

House of Haddock has 5,110 shares outstanding and the stock price is $151. The company is expected to pay a dividend of $20 per share next year and thereafter the dividend is expected to grow...

expected dividend for year 2 only. thanks! House of Haddock has 5,110 shares outstanding and the stock price is $151. The company is expected to pay a dividend of $20 per share next year and...

EX5 House of Haddock has 5,000 shares outstanding and the stock price is $140. The company is expected to pay a dividend of $20 per share next year and thereafter the dividend is expected to grow...

Sam is planning to arrange a tailor-made bank deposit investment plan that can generate a regular annual interest income of $35,000, starting with the first payment received 6 years from now and the...

ESY a manufacturing concern and sell its product A to northern region of country. Information related to product sales price and costs is as follows: Particulars Rs (per unit) Sales price 1,500...

A logical model __________. Group of answer choices is a conceptual tool that allows you to form questions in a more context-specific way. spells out the process by which an underlying cause leads to...

A bookstore offers a 20 percent discount on selected titles one month and then an additional 10 percent discount on the same titles the following month. What single discount is equivalent to these...

A wide pipe can fill a barrel in 2 hours, and another smaller pipe can fill the same barrel in 6 hours. In how many hours will the two pipes fill the barrel if both work together?

Design and build a circuit using a 556 timer IC to create an output waveform with the following characteristics: Positive Duty Cycle: 80% (+/-5%) Frequency: 20Hz (+/-2Hz) You are not to use your...

26. If ABCD is a square and ABE is an equilateral triangle, then what is the measure of

After successive discounts of 15 percent and 10 percent have been allowed on the market price of a certain article, the net price is $306. What is the market price?

Tori and some other childeen experimented with balls to see which ones rolled. First using a piece of cardboard to use as a ramp, they angled it on a block to the floor to test the balls. Then Tori...

Why did the Foundation run this ad? Is the ad antiunion propaganda? Do you think the Foundation is sincerely interested in the rights of individual workers? Or is it simply interested in weakening...

Presumably Paul Robertson could have joined the union, but he chose not to. What principle, if any, do you think he was fighting for? Assess the union charge that people like Paul Robertson are free...

What do you see as the likely motivations of Bechtel Power and the union? How would they justify their conduct? THE NAT IONAL RIGHT TO WORK LEGAL Defense Foundation is one of several anti-union...