Business, 26.02.2020 01:52 MarbleMonkey7907

The stock of Nogro Corporation is currently selling for $10 per share. Earnings per share in the coming year are expected to be $2. The company has a policy of paying out 50% of its earnings each year in dividends. The rest is retained and invested in projects that earn a 20% rate of return per year. This situation is expected to continue indefinitely.

ANSWER ALL OF THE FOLLOWING:

a. Assuming the current market price of the stock reflects its value, what rate of return do Nogro’s investors require?

b. By how much does its value exceed what it would be if all earnings were paid as dividends and nothing were reinvested?

c. What is the PVGO for this company?

d. If Nogro were to cut its dividend payout ratio to 25%, what would happen to its stock price?

e. What did you notice about the relationship between Nogro’s dividend payout policy and its price? f. What do you think is the reason for such relationship?

Answers: 1

Show answers

Another question on Business

Business, 22.06.2019 14:00

Wallace company provides the following data for next year: month budgeted sales january $120,000 february 108,000 march 140,000 april 147,000 the gross profit rate is 35% of sales. inventory at the end of december is $29,600 and target ending inventory levels are 10% of next month's sales, stated at cost. what is the amount of purchases budgeted for january?

Answers: 1

Answer

Business, 22.06.2019 19:30

Which of the following statements are false regarding activity-based costing? non-manufacturing costs are important to include when calculating the cost of each product. costs are allocated based on a pre-determined overhead rate. transitioning from traditional costing methods to activity-based costing can be complicated and costly. activity-based costing follows the same basic calculation methods as traditional costing approaches. none of the above

Answers: 2

Answer

Business, 22.06.2019 19:30

Each row in a database is a set of unique information called a(n) table. record. object. field.

Answers: 3

Answer

Business, 22.06.2019 20:20

Trade will take place: a. if the maximum that a consumer is willing and able to pay is less than the minimum price the producer is willing and able to accept for a good. b. if the maximum that a consumer is willing and able to pay is greater than the minimum price the producer is willing and able to accept for a good. c. only if the maximum that a consumer is willing and able to pay is equal to the minimum price the producer is willing and able to accept for a good. d. none of the above.

Answers: 3

Answer

You know the right answer?

The stock of Nogro Corporation is currently selling for $10 per share. Earnings per share in the com...

Questions