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Consolidated Pasta is currently expected to pay annual dividends of $ 1 0 a share in perpetuity on the 2 . 8 million shares that
Consolidated Pasta is currently expected to pay annual dividends of $ a share in perpetuity on the million shares that are outstanding. Shareholders require a rate of return from Consolidated stock. a What is the price of Consolidated stock? Do not round intermediate calculations. b What is the total market value of its equity? Enter your answer in millions. Consolidated now decides to increase next years dividend to $ a share, without changing its investment or borrowing plans. Thereafter the company will revert to its policy of distributing $ million a year. c How much new equity capital will the company need to raise to finance the extra dividend payment? Enter your answer in millions. d What will be the total present value of dividends paid each year on the new shares that the company will need to issue? Enter your answer in millions. e What will be the transfer of value from the old shareholders to the new shareholders? Enter your answer in millions. f Is this figure more than, less than, or the same as the extra dividend that the old shareholders will receive? More than, less than, the same
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