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Chapter 7 ABC Corporation currently pays no dividends on its common stock but plans to pay a dividend of $2.00 a share in 6 years.
Chapter 7 ABC Corporation currently pays no dividends on its common stock but plans to pay a dividend of $2.00 a share in 6 years. It then plans to increase its dividend at an annual rate of 3% indefinitely. If your required rate of return is 8%, EXPLAIN (and show with numbers) how you would solve for the maximum price that you would be willing to pay for the stock TODAY. Chapter 16 An all-equity firm currently has 2.5 million shares of stock outstanding and is considering borrowing $10 million at 7% and buying back two-fifths of those shares. Solve for the break-even EBIT assuming a tax rate of zero and then show that (a) at an EBIT above the break-even, EPS would be higher with debt than without debt; and (b) at an EBIT below the break-even, EPS would be lower with debt than without debt
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