Question: Question 2 Samson Co. has a current cash flow (at time 0) of $2.5 m and pays no dividends. The present value of the company's

 Question 2 Samson Co. has a current cash flow (at time

Question 2 Samson Co. has a current cash flow (at time 0) of $2.5 m and pays no dividends. The present value of the company's future cash flows is $12.5 m. The firm is entirely financed with cquity and has 500,000 shares outstanding. Assume the dividend tax rate is zero. a. What is the share price of Samson stock? b. Suppose the board of directors of Sanson Co. announces its plan to payout 50% of its current cash flow as dividends to its sharcholders. How can Marcus Caniby, who owns 500 shares of Samson stock, achieve a co payout policy on his own

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!