23

i am 23 years old

4. MGM International just announced that it will pay Stage/10) dividends next year. The company decided not to retain any earnings. a. Since the company will distribute all their earnings, the company is not expected to grow. The current share price for MGM is $10. Calculate the discount rate. b. Assume that MGM Resorts International decided to cut its dividend payout ratio to 67%. How much should be the new discount rate? 5. A treasury bond with a face value of $5,000 has 11 years until maturity and pays quarterly interest at an annual coupon rate of 12 percent? How much is the value of the bond if the required return on similar-risk bonds is (age)%. 6. Allegiant Travel Company (ALGT) just paid a dividend of S1.70 per share, it is currently expected to grow at a constant rate of 5%, and has a required return of 11%. Allegiant Travel Company has been approached to purchase another company. ALGT estimates if it buys the company, its constant growth rate would increase to 6.5%, but the firm would also be riskier, therefore increasing the required return of the company to 12%. Should ALGT go ahead with the purchase of the new company? Calculate and interpret your answers