Author Question: Karkas Cold Cuts Inc. has $20 of cash and analysts expect the company to generate $10 of free cash ... (Read 26 times)

mmm · **on:** Apr 25, 2021

Karkas Cold Cuts Inc. has $20 of cash and analysts expect the company to generate $10 of free cash flow at the end of the current year. The same amount of free cash is expected annually in perpetuity. Karkas is all equity financed and stock holders require a return of 10%. There are 200 shares outstanding. Karkas is considering a cash dividend of $0.10 per share. If it pays the dividend, then what will the stock price be after the dividend?
◦ $0.30
◦ $0.40
◦ $0.50
◦ $0.60

xthemafja · **Reply #1 on:** Apr 25, 2021

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