Question
The earnings per share (EPS) for PLO Corporation is currently at $5, and there are 100,000 outstanding shares in the company. a) Suppose the dividend
The earnings per share (EPS) for PLO Corporation is currently at $5, and there are 100,000
outstanding shares in the company.
a) Suppose the dividend payout ratio for the firm is 100%, what is the expected share price
for PLO Corporation if the required return rate is 10%?
b) If the dividend payout ratio is 80%,
(i) what is the value of plowback ratio?
(ii) what is the expected (sustainable) growth rate of dividend if the return on equity (ROE)
is 10%?
(iii)what is the expected share price for PLO corporation and what is the market
capitalization for the firm if the required return rate is 10%?
The earnings per share (EPS) for PLO Corporation is currently at $5, and there are 100,000
outstanding shares in the company.
a) Suppose the dividend payout ratio for the firm is 100%, what is the expected share price
for PLO Corporation if the required return rate is 10%?
b) If the dividend payout ratio is 80%,
(i) what is the value of plowback ratio?
(ii) what is the expected (sustainable) growth rate of dividend if the return on equity (ROE)
is 10%?
(iii)what is the expected share price for PLO corporation and what is the market
capitalization for the firm if the required return rate is 10%?
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Multinational Finance
Authors: Kirt C. Butler
3rd Edition
0324177453, 978-0324177459
