33 1 Small niche player in the craft beer space, Hipster Beard Brewery Ltd., has 1,538, 600 shares outstanding and achieves a constant, sustainable, annual free cash flow of $9, 169, 748 to be distributed among shareholders at the end of each fiscal year. There is no debt. It is recommended that you use 3 decimals for share prices and dividends per share. A) Given a cost of capital of 9.90%, what should shares cost today, at the start of the fiscal year? $ out of uestion B) What will be the fair market price of a share at the end of the fiscal year, just before going ex-dividend? $ /share The firm considers a one-time alternative payout policy, whereby at the end of this fiscal year, just before the ex-dividend date, the firm will use its entire free cash flow of that year to buy back shares at market price in lieu of a dividend. C) How many shares can the firm buy back? shares D) What will the new dividend per share be in all future years if the firm goes back to paying out all cash flow as dividends? $ E) Under the buyback plan, what will be the present value of all future dividends per share standing at the end of this fiscal year? $ share A retiree has been holdings 7, 693 shares of Hipster Beard Brewery Ltd. for a long time and has gotten used to the annual dividend. F) What has been his annual dividend income from his position in the company? $ He is not happy with losing out on this year's dividend. What do you suggest he do? G) He should (No answer given) - shares at the (No answer given) of the current fiscal year. 33 1 Small niche player in the craft beer space, Hipster Beard Brewery Ltd., has 1,538, 600 shares outstanding and achieves a constant, sustainable, annual free cash flow of $9, 169, 748 to be distributed among shareholders at the end of each fiscal year. There is no debt. It is recommended that you use 3 decimals for share prices and dividends per share. A) Given a cost of capital of 9.90%, what should shares cost today, at the start of the fiscal year? $ out of uestion B) What will be the fair market price of a share at the end of the fiscal year, just before going ex-dividend? $ /share The firm considers a one-time alternative payout policy, whereby at the end of this fiscal year, just before the ex-dividend date, the firm will use its entire free cash flow of that year to buy back shares at market price in lieu of a dividend. C) How many shares can the firm buy back? shares D) What will the new dividend per share be in all future years if the firm goes back to paying out all cash flow as dividends? $ E) Under the buyback plan, what will be the present value of all future dividends per share standing at the end of this fiscal year? $ share A retiree has been holdings 7, 693 shares of Hipster Beard Brewery Ltd. for a long time and has gotten used to the annual dividend. F) What has been his annual dividend income from his position in the company? $ He is not happy with losing out on this year's dividend. What do you suggest he do? G) He should (No answer given) - shares at the (No answer given) of the current fiscal year