The Giant Machinery has the current capital structure of 65% equity and 35% debt. Its net income
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Question:
The Giant Machinery has the current capital structure of 65% equity and 35% debt. Its net income in the current year is $250,000. The company is planning to launch a project that will requires an investment of $175,000 next year. Currently the share of Giant machinery is $25/share.
Required:
If the company is paying a dividend of $2.50/share and tomorrow the stock will go ex-dividend.
Calculate the ex-dividend price tomorrow morning. Assuming the tax on dividend is 15%
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