Author Question: Tina's Medical Equipment Company paid 2.25 common stock dividend last year. The company's policy is ... (Read 95 times)

Kikoku

  • Hero Member
  • *****
  • Posts: 540
Tina's Medical Equipment Company paid 2.25 common stock dividend last year. The company's policy is to allow its dividend to grow at 5 percent per year indefinitely. What is the value of the stock if the required rate of return is 8 percent?
 
  What will be an ideal response?

Question 2

In the development of pro forma statements, a firm that requires external funds means that its projected level of cash is in excess of its needs and that funds would therefore be available for repaying debt, repurchasing stock, or increasing the
 
  dividend to stockholders.
  Indicate whether the statement is true or false



poopface

  • Sr. Member
  • ****
  • Posts: 339
Answer to Question 1

P = D1 / (r - g) = 2.25  (1 + 0.05 ) / (0.08 - 0.05 ) = 78.75

Answer to Question 2

FALSE



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question


 

Did you know?

If you use artificial sweeteners, such as cyclamates, your eyes may be more sensitive to light. Other factors that will make your eyes more sensitive to light include use of antibiotics, oral contraceptives, hypertension medications, diuretics, and antidiabetic medications.

Did you know?

Looking at the sun may not only cause headache and distort your vision temporarily, but it can also cause permanent eye damage. Any exposure to sunlight adds to the cumulative effects of ultraviolet (UV) radiation on your eyes. UV exposure has been linked to eye disorders such as macular degeneration, solar retinitis, and corneal dystrophies.

Did you know?

Serum cholesterol testing in adults is recommended every 1 to 5 years. People with diabetes and a family history of high cholesterol should be tested even more frequently.

Did you know?

According to the National Institute of Environmental Health Sciences, lung disease is the third leading killer in the United States, responsible for one in seven deaths. It is the leading cause of death among infants under the age of one year.

Did you know?

Certain topical medications such as clotrimazole and betamethasone are not approved for use in children younger than 12 years of age. They must be used very cautiously, as directed by a doctor, to treat any child. Children have a much greater response to topical steroid medications.

For a complete list of videos, visit our video library