Question
Need ASAP. Finance Major The HNH Corporation will pay a constant dividend of $2.00 pershare, peryear, in perpetuity. Assume all investors pay a 15% tax
Need ASAP. Finance Major
The HNH Corporation will pay a constant dividend of $2.00 pershare, peryear, in perpetuity. Assume all investors pay a 15% tax on dividends and that there is no capital gains tax. Suppose the other investments with equivalent risk to HNH stock offer anafter-tax return of 12%.
a. What is the price of a share of HNHstock?
b. Assume that management makes a surprise announcement that HNH will no longer pay dividends but will use the cash to repurchase stock instead. What is the price of a share of HNH stocknow?
a. What is the price of a share of HNHstock?
The price is ______per share (round to the nearest cent)
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Essentials of Investments
Authors: Zvi Bodie, Alex Kane, Alan J. Marcus
10th edition
77835425, 978-0077835422
