Question
Consolidated Pasta is currently expected to pay annual dividends of $10 a share in perpetuity on the 3.0 million shares that are outstanding. Shareholders require
Consolidated Pasta is currently expected to pay annual dividends of $10 a share in perpetuity on the 3.0 million shares that are outstanding. Shareholders require a 8% rate of return from Consolidated stock. 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.) Present value $ million e. What will be the transfer of value from the old shareholders to the new shareholders? (Enter your answer in millions.) Transfer of value $ million 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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