Question
You have invested 5,000 in a solar-panel manufacturer, Sonafi! PLC. The company's shares trade at 10 per share and pay an annual dividend off 1.50.
You have invested 5,000 in a solar-panel manufacturer, Sonafi! PLC. The company's shares trade at 10 per share and pay an annual dividend off 1.50. It has been announced that next year the company will eliminate the dividends but is predicted to grow at 15% a year due to a plowback ratio of 100%.
(a) What was your annual dividend income, before the dividend payments were stopped?
(b) What will be the share price of Sonafil, PLC, after the dividend payments are stopped next year?
(c) What will you need to do next year in order to maintain your current income and investment position?
(d) What is the total value of shares that you will hold next year? Round your answers to the nearest whole number.
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