Stock split- Firm Growth Industries' current stockholders' equity account is as follows: Preferred stock Common stock...

   

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Stock split- Firm Growth Industries' current stockholders' equity account is as follows: Preferred stock Common stock (600,000 shares at $3 par) Paid-in capital in excess of par Retained earnings Total stockholders' equity $ 400,000 1,800,000 200,000 800.000 $3.200.000 a. Indicate the change, if any, expected if the firm declares a 2-for-1 stock split. b. Indicate the change, if any, expected if the firm declares a 1-for-1 ½ reverse stock split. c. Indicate the change, if any, expected if the firm declares a 3-for-1 stock split. Indicate the change, if any, expected if the firm declares a 6-for-1 stock split. d. e. Indicate the change, if any, expected if the firm declares a 1-for-4 reverse stock split. What is the current value of a share of Commonwealth Edison common stock to an investor who requires a 12 percent annual rate of return, if next year's dividend, D₁, is expected to be $3 per share and dividends are expected to grow at an annual rate of 4 percent for the foreseeable future? The Edgar Corporation currently (Do) pays a $2 per share dividend. This dividend is expected to grow at a 20 percent annual rate over the next three years and then to grow at a 6 percent per year for the foreseeable future. What would you pay for a share of this stock if you demand a 20 percent rate or return? Utilice como ejemplo la Tabla 8.4 para resolver este ejercicio. Table 8.4 Value of HILO Electronics Common Stock Dividend Year, t D₁ = $2.00(1+0.12) Present Value of First 5 Years' Dividends 1 2 3 4 5 $2.00(1+0.12) = $2.24 2.00(1+0.12)2 = 2.51 2.00(1+0.12)³= 2.81 3.15 3.53 2.00(1+0.12) 2.00(1+0.12) Value of Stock at End of Year 5. Ps = D₂ ke-82 Do 0.15-0.06 Ps = D = D₁(1 +82) = $3.53(1 + 0.06) = $3.74 Present Value of Ps, PV(Ps) = $3.74 0.15-0.06 = $41.56 (1 + k)s $41.56 (1 + 0.15) = $41.56(PVIForss) = $41.56(0.497) = $20.66 Present Value Interest Factor, PVIF0.15.1 = $29.91 0.870 0.756 0.658 0.572 0.497 Value of Common Stock, Po PV (first 5 years' dividends) + PV(Ps) Po= $9.25 + $20.66 Present Value, D₁ $1.95 $1.90 $1.85 $1.80 $1.75 $9.25 Stock split- Firm Growth Industries' current stockholders' equity account is as follows: Preferred stock Common stock (600,000 shares at $3 par) Paid-in capital in excess of par Retained earnings Total stockholders' equity $ 400,000 1,800,000 200,000 800.000 $3.200.000 a. Indicate the change, if any, expected if the firm declares a 2-for-1 stock split. b. Indicate the change, if any, expected if the firm declares a 1-for-1 ½ reverse stock split. c. Indicate the change, if any, expected if the firm declares a 3-for-1 stock split. Indicate the change, if any, expected if the firm declares a 6-for-1 stock split. d. e. Indicate the change, if any, expected if the firm declares a 1-for-4 reverse stock split. What is the current value of a share of Commonwealth Edison common stock to an investor who requires a 12 percent annual rate of return, if next year's dividend, D₁, is expected to be $3 per share and dividends are expected to grow at an annual rate of 4 percent for the foreseeable future? The Edgar Corporation currently (Do) pays a $2 per share dividend. This dividend is expected to grow at a 20 percent annual rate over the next three years and then to grow at a 6 percent per year for the foreseeable future. What would you pay for a share of this stock if you demand a 20 percent rate or return? Utilice como ejemplo la Tabla 8.4 para resolver este ejercicio. Table 8.4 Value of HILO Electronics Common Stock Dividend Year, t D₁ = $2.00(1+0.12) Present Value of First 5 Years' Dividends 1 2 3 4 5 $2.00(1+0.12) = $2.24 2.00(1+0.12)2 = 2.51 2.00(1+0.12)³= 2.81 3.15 3.53 2.00(1+0.12) 2.00(1+0.12) Value of Stock at End of Year 5. Ps = D₂ ke-82 Do 0.15-0.06 Ps = D = D₁(1 +82) = $3.53(1 + 0.06) = $3.74 Present Value of Ps, PV(Ps) = $3.74 0.15-0.06 = $41.56 (1 + k)s $41.56 (1 + 0.15) = $41.56(PVIForss) = $41.56(0.497) = $20.66 Present Value Interest Factor, PVIF0.15.1 = $29.91 0.870 0.756 0.658 0.572 0.497 Value of Common Stock, Po PV (first 5 years' dividends) + PV(Ps) Po= $9.25 + $20.66 Present Value, D₁ $1.95 $1.90 $1.85 $1.80 $1.75 $9.25 Stock split- Firm Growth Industries' current stockholders' equity account is as follows: Preferred stock Common stock (600,000 shares at $3 par) Paid-in capital in excess of par Retained earnings Total stockholders' equity $ 400,000 1,800,000 200,000 800.000 $3.200.000 a. Indicate the change, if any, expected if the firm declares a 2-for-1 stock split. b. Indicate the change, if any, expected if the firm declares a 1-for-1 ½ reverse stock split. c. Indicate the change, if any, expected if the firm declares a 3-for-1 stock split. Indicate the change, if any, expected if the firm declares a 6-for-1 stock split. d. e. Indicate the change, if any, expected if the firm declares a 1-for-4 reverse stock split. What is the current value of a share of Commonwealth Edison common stock to an investor who requires a 12 percent annual rate of return, if next year's dividend, D₁, is expected to be $3 per share and dividends are expected to grow at an annual rate of 4 percent for the foreseeable future? The Edgar Corporation currently (Do) pays a $2 per share dividend. This dividend is expected to grow at a 20 percent annual rate over the next three years and then to grow at a 6 percent per year for the foreseeable future. What would you pay for a share of this stock if you demand a 20 percent rate or return? Utilice como ejemplo la Tabla 8.4 para resolver este ejercicio. Table 8.4 Value of HILO Electronics Common Stock Dividend Year, t D₁ = $2.00(1+0.12) Present Value of First 5 Years' Dividends 1 2 3 4 5 $2.00(1+0.12) = $2.24 2.00(1+0.12)2 = 2.51 2.00(1+0.12)³= 2.81 3.15 3.53 2.00(1+0.12) 2.00(1+0.12) Value of Stock at End of Year 5. Ps = D₂ ke-82 Do 0.15-0.06 Ps = D = D₁(1 +82) = $3.53(1 + 0.06) = $3.74 Present Value of Ps, PV(Ps) = $3.74 0.15-0.06 = $41.56 (1 + k)s $41.56 (1 + 0.15) = $41.56(PVIForss) = $41.56(0.497) = $20.66 Present Value Interest Factor, PVIF0.15.1 = $29.91 0.870 0.756 0.658 0.572 0.497 Value of Common Stock, Po PV (first 5 years' dividends) + PV(Ps) Po= $9.25 + $20.66 Present Value, D₁ $1.95 $1.90 $1.85 $1.80 $1.75 $9.25 Stock split- Firm Growth Industries' current stockholders' equity account is as follows: Preferred stock Common stock (600,000 shares at $3 par) Paid-in capital in excess of par Retained earnings Total stockholders' equity $ 400,000 1,800,000 200,000 800.000 $3.200.000 a. Indicate the change, if any, expected if the firm declares a 2-for-1 stock split. b. Indicate the change, if any, expected if the firm declares a 1-for-1 ½ reverse stock split. c. Indicate the change, if any, expected if the firm declares a 3-for-1 stock split. Indicate the change, if any, expected if the firm declares a 6-for-1 stock split. d. e. Indicate the change, if any, expected if the firm declares a 1-for-4 reverse stock split. What is the current value of a share of Commonwealth Edison common stock to an investor who requires a 12 percent annual rate of return, if next year's dividend, D₁, is expected to be $3 per share and dividends are expected to grow at an annual rate of 4 percent for the foreseeable future? The Edgar Corporation currently (Do) pays a $2 per share dividend. This dividend is expected to grow at a 20 percent annual rate over the next three years and then to grow at a 6 percent per year for the foreseeable future. What would you pay for a share of this stock if you demand a 20 percent rate or return? Utilice como ejemplo la Tabla 8.4 para resolver este ejercicio. Table 8.4 Value of HILO Electronics Common Stock Dividend Year, t D₁ = $2.00(1+0.12) Present Value of First 5 Years' Dividends 1 2 3 4 5 $2.00(1+0.12) = $2.24 2.00(1+0.12)2 = 2.51 2.00(1+0.12)³= 2.81 3.15 3.53 2.00(1+0.12) 2.00(1+0.12) Value of Stock at End of Year 5. Ps = D₂ ke-82 Do 0.15-0.06 Ps = D = D₁(1 +82) = $3.53(1 + 0.06) = $3.74 Present Value of Ps, PV(Ps) = $3.74 0.15-0.06 = $41.56 (1 + k)s $41.56 (1 + 0.15) = $41.56(PVIForss) = $41.56(0.497) = $20.66 Present Value Interest Factor, PVIF0.15.1 = $29.91 0.870 0.756 0.658 0.572 0.497 Value of Common Stock, Po PV (first 5 years' dividends) + PV(Ps) Po= $9.25 + $20.66 Present Value, D₁ $1.95 $1.90 $1.85 $1.80 $1.75 $9.25 Stock split- Firm Growth Industries' current stockholders' equity account is as follows: Preferred stock Common stock (600,000 shares at $3 par) Paid-in capital in excess of par Retained earnings Total stockholders' equity $ 400,000 1,800,000 200,000 800.000 $3.200.000 a. Indicate the change, if any, expected if the firm declares a 2-for-1 stock split. b. Indicate the change, if any, expected if the firm declares a 1-for-1 ½ reverse stock split. c. Indicate the change, if any, expected if the firm declares a 3-for-1 stock split. Indicate the change, if any, expected if the firm declares a 6-for-1 stock split. d. e. Indicate the change, if any, expected if the firm declares a 1-for-4 reverse stock split. What is the current value of a share of Commonwealth Edison common stock to an investor who requires a 12 percent annual rate of return, if next year's dividend, D₁, is expected to be $3 per share and dividends are expected to grow at an annual rate of 4 percent for the foreseeable future? The Edgar Corporation currently (Do) pays a $2 per share dividend. This dividend is expected to grow at a 20 percent annual rate over the next three years and then to grow at a 6 percent per year for the foreseeable future. What would you pay for a share of this stock if you demand a 20 percent rate or return? Utilice como ejemplo la Tabla 8.4 para resolver este ejercicio. Table 8.4 Value of HILO Electronics Common Stock Dividend Year, t D₁ = $2.00(1+0.12) Present Value of First 5 Years' Dividends 1 2 3 4 5 $2.00(1+0.12) = $2.24 2.00(1+0.12)2 = 2.51 2.00(1+0.12)³= 2.81 3.15 3.53 2.00(1+0.12) 2.00(1+0.12) Value of Stock at End of Year 5. Ps = D₂ ke-82 Do 0.15-0.06 Ps = D = D₁(1 +82) = $3.53(1 + 0.06) = $3.74 Present Value of Ps, PV(Ps) = $3.74 0.15-0.06 = $41.56 (1 + k)s $41.56 (1 + 0.15) = $41.56(PVIForss) = $41.56(0.497) = $20.66 Present Value Interest Factor, PVIF0.15.1 = $29.91 0.870 0.756 0.658 0.572 0.497 Value of Common Stock, Po PV (first 5 years' dividends) + PV(Ps) Po= $9.25 + $20.66 Present Value, D₁ $1.95 $1.90 $1.85 $1.80 $1.75 $9.25 Stock split- Firm Growth Industries' current stockholders' equity account is as follows: Preferred stock Common stock (600,000 shares at $3 par) Paid-in capital in excess of par Retained earnings Total stockholders' equity $ 400,000 1,800,000 200,000 800.000 $3.200.000 a. Indicate the change, if any, expected if the firm declares a 2-for-1 stock split. b. Indicate the change, if any, expected if the firm declares a 1-for-1 ½ reverse stock split. c. Indicate the change, if any, expected if the firm declares a 3-for-1 stock split. Indicate the change, if any, expected if the firm declares a 6-for-1 stock split. d. e. Indicate the change, if any, expected if the firm declares a 1-for-4 reverse stock split. What is the current value of a share of Commonwealth Edison common stock to an investor who requires a 12 percent annual rate of return, if next year's dividend, D₁, is expected to be $3 per share and dividends are expected to grow at an annual rate of 4 percent for the foreseeable future? The Edgar Corporation currently (Do) pays a $2 per share dividend. This dividend is expected to grow at a 20 percent annual rate over the next three years and then to grow at a 6 percent per year for the foreseeable future. What would you pay for a share of this stock if you demand a 20 percent rate or return? Utilice como ejemplo la Tabla 8.4 para resolver este ejercicio. Table 8.4 Value of HILO Electronics Common Stock Dividend Year, t D₁ = $2.00(1+0.12) Present Value of First 5 Years' Dividends 1 2 3 4 5 $2.00(1+0.12) = $2.24 2.00(1+0.12)2 = 2.51 2.00(1+0.12)³= 2.81 3.15 3.53 2.00(1+0.12) 2.00(1+0.12) Value of Stock at End of Year 5. Ps = D₂ ke-82 Do 0.15-0.06 Ps = D = D₁(1 +82) = $3.53(1 + 0.06) = $3.74 Present Value of Ps, PV(Ps) = $3.74 0.15-0.06 = $41.56 (1 + k)s $41.56 (1 + 0.15) = $41.56(PVIForss) = $41.56(0.497) = $20.66 Present Value Interest Factor, PVIF0.15.1 = $29.91 0.870 0.756 0.658 0.572 0.497 Value of Common Stock, Po PV (first 5 years' dividends) + PV(Ps) Po= $9.25 + $20.66 Present Value, D₁ $1.95 $1.90 $1.85 $1.80 $1.75 $9.25 Stock split- Firm Growth Industries' current stockholders' equity account is as follows: Preferred stock Common stock (600,000 shares at $3 par) Paid-in capital in excess of par Retained earnings Total stockholders' equity $ 400,000 1,800,000 200,000 800.000 $3.200.000 a. Indicate the change, if any, expected if the firm declares a 2-for-1 stock split. b. Indicate the change, if any, expected if the firm declares a 1-for-1 ½ reverse stock split. c. Indicate the change, if any, expected if the firm declares a 3-for-1 stock split. Indicate the change, if any, expected if the firm declares a 6-for-1 stock split. d. e. Indicate the change, if any, expected if the firm declares a 1-for-4 reverse stock split. What is the current value of a share of Commonwealth Edison common stock to an investor who requires a 12 percent annual rate of return, if next year's dividend, D₁, is expected to be $3 per share and dividends are expected to grow at an annual rate of 4 percent for the foreseeable future? The Edgar Corporation currently (Do) pays a $2 per share dividend. This dividend is expected to grow at a 20 percent annual rate over the next three years and then to grow at a 6 percent per year for the foreseeable future. What would you pay for a share of this stock if you demand a 20 percent rate or return? Utilice como ejemplo la Tabla 8.4 para resolver este ejercicio. Table 8.4 Value of HILO Electronics Common Stock Dividend Year, t D₁ = $2.00(1+0.12) Present Value of First 5 Years' Dividends 1 2 3 4 5 $2.00(1+0.12) = $2.24 2.00(1+0.12)2 = 2.51 2.00(1+0.12)³= 2.81 3.15 3.53 2.00(1+0.12) 2.00(1+0.12) Value of Stock at End of Year 5. Ps = D₂ ke-82 Do 0.15-0.06 Ps = D = D₁(1 +82) = $3.53(1 + 0.06) = $3.74 Present Value of Ps, PV(Ps) = $3.74 0.15-0.06 = $41.56 (1 + k)s $41.56 (1 + 0.15) = $41.56(PVIForss) = $41.56(0.497) = $20.66 Present Value Interest Factor, PVIF0.15.1 = $29.91 0.870 0.756 0.658 0.572 0.497 Value of Common Stock, Po PV (first 5 years' dividends) + PV(Ps) Po= $9.25 + $20.66 Present Value, D₁ $1.95 $1.90 $1.85 $1.80 $1.75 $9.25 Stock split- Firm Growth Industries' current stockholders' equity account is as follows: Preferred stock Common stock (600,000 shares at $3 par) Paid-in capital in excess of par Retained earnings Total stockholders' equity $ 400,000 1,800,000 200,000 800.000 $3.200.000 a. Indicate the change, if any, expected if the firm declares a 2-for-1 stock split. b. Indicate the change, if any, expected if the firm declares a 1-for-1 ½ reverse stock split. c. Indicate the change, if any, expected if the firm declares a 3-for-1 stock split. Indicate the change, if any, expected if the firm declares a 6-for-1 stock split. d. e. Indicate the change, if any, expected if the firm declares a 1-for-4 reverse stock split. What is the current value of a share of Commonwealth Edison common stock to an investor who requires a 12 percent annual rate of return, if next year's dividend, D₁, is expected to be $3 per share and dividends are expected to grow at an annual rate of 4 percent for the foreseeable future? The Edgar Corporation currently (Do) pays a $2 per share dividend. This dividend is expected to grow at a 20 percent annual rate over the next three years and then to grow at a 6 percent per year for the foreseeable future. What would you pay for a share of this stock if you demand a 20 percent rate or return? Utilice como ejemplo la Tabla 8.4 para resolver este ejercicio. Table 8.4 Value of HILO Electronics Common Stock Dividend Year, t D₁ = $2.00(1+0.12) Present Value of First 5 Years' Dividends 1 2 3 4 5 $2.00(1+0.12) = $2.24 2.00(1+0.12)2 = 2.51 2.00(1+0.12)³= 2.81 3.15 3.53 2.00(1+0.12) 2.00(1+0.12) Value of Stock at End of Year 5. Ps = D₂ ke-82 Do 0.15-0.06 Ps = D = D₁(1 +82) = $3.53(1 + 0.06) = $3.74 Present Value of Ps, PV(Ps) = $3.74 0.15-0.06 = $41.56 (1 + k)s $41.56 (1 + 0.15) = $41.56(PVIForss) = $41.56(0.497) = $20.66 Present Value Interest Factor, PVIF0.15.1 = $29.91 0.870 0.756 0.658 0.572 0.497 Value of Common Stock, Po PV (first 5 years' dividends) + PV(Ps) Po= $9.25 + $20.66 Present Value, D₁ $1.95 $1.90 $1.85 $1.80 $1.75 $9.25

Answer rating: 100% (QA)

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