Question
1) Adelaide Corp. has earnings of $3 a share based upon an ordinary share book value of $25 per share as at the beginning of
1) Adelaide Corp. has earnings of $3 a share based upon an ordinary share book value of $25 per share as at the beginning of the year. The firm also announced a dividend of $1.50 this year.
What is the retention ratio of the firm?
What is the return on equity of the firm?
What is the expected growth rate in earnings of the firm?
2) ABC Ltd, with 80 outstanding shares, has $100 in earnings after taxes. The firm is considering an on-market buy back for 20% of the shares at the market price of $15 per share. The management has decided to use the excess cash reserves which currently earns 7.5% interest after-tax, to finance this buy-back. What is the expected EPS if this buy-back goes ahead:
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Practical Financial Management
Authors: William R. Lasher
6th Edition
1439080496, 978-1439080498
