Thursday
July 24, 2014

Homework Help: Financing

Posted by Anonymous on Thursday, March 13, 2014 at 1:03pm.

A person is considering buying the stock of two home health companies that are similar in all respects except for the proportion of earnings paid out as dividends. Both companies are expected to earn $6 per share in the coming year, but Company D (for dividends) is expected to pay out the entire amount as dividends, while Company G (for growth) is expected to pay out only one-third of its earnings, or $2 per share. The companies are equally risky, and their required rate of return is 15 percent. D's constant growth rate is zero, and G's is 8.33 percent. What are the intrinsic values of Stocks D and G?

Answer this Question

First Name:
School Subject:
Answer:

Related Questions

Finance - A person is considering buying the stock of two home health companies ...
FINANCE 200 - Which account represents the cumulative earnings of the firm since...
accounting/finance - 2. Which account represents the cumulative earnings of the ...
accounting - PA11-4 Comparing Stock and Cash Dividends [LO2, LO3, LO4] Ritz ...
business - Computer World inc. paid out $22.5 million in total common dividends ...
Accounting - Entries for Stock Dividends Organic Life Co. is an HMO for ...
investing - new millenium company's stock sells at a P/E ratio of 21 times ...
Healthcare Finance - 2 A firm that owns the stock of another corporation does ...
Healthcare Finance - 2 A firm that owns the stock of another corporation does ...
Healthcare Finance - A firm that owns the stock of another corporation does not ...

Search
Members