Flowers R Us sells flowers and vases successfully all year round. The cost of production, taxes, and other expenses are covered by the income stream, and there is enough cash left to pay out dividends to the stockholders. The return that the investors receive from Flowers R Us is 14 percent each year. Just a couple of days ago, Flowers R Us paid a dividend of $11.40 on each stock share. Recently, Flowers R Us announced that it plans to reduce the dollar amount of its annual dividend by 5 % each year, and that it will be maintaining this new dividend structure from this point on. If you buy one share of Flowers R Us' stock in today's market, how much should you expect to pay for it? (Increase the decimal places and do not round your intermediate calculations. Only your final answer should be rounded to 2 decimal places, e.g., 32.16.) Current share price

Flowers R Us sells flowers and vases successfully all year round. The cost of production, taxes, and other expenses are covered by the income stream, and there is enough cash left to pay out dividends to the stockholders. The return that the investors receive from Flowers R Us is 14 percent each year. Just a couple of days ago, Flowers R Us paid a dividend of $11.40 on each stock share. Recently, Flowers R Us announced that it plans to reduce the dollar amount of its annual dividend by 5 % each year, and that it will be maintaining this new dividend structure from this point on. If you buy one share of Flowers R Us' stock in today's market, how much should you expect to pay for it? (Increase the decimal places and do not round your intermediate calculations. Only your final answer should be rounded to 2 decimal places, e.g., 32.16.) Current share price

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Flowers R Us sells flowers and vases successfully all year round. The cost of production, taxes, and other expenses are covered by the income stream, and there is enough cash left to pay out dividends to the stockholders. The return that the investors receive from Flowers R Us is 15 percent each year. Just a couple of days ago, Flowers R Us paid a dividend of $9.15 on each stock share. Recently, Flowers R Us announced that it plans to reduce the dollar amount of its annual dividend by 5% each year, and that it will be maintaining this new dividend structure from this point on. If you buy one share of Flowers R Us' stock in today's market, how much should you expect to pay for it?
(Calculating rates of return) Blaxo Balloons manufactures and distributes birthday balloons. At the beginning of the year Blaxo's common stock was selling for $21.75 but by year end it was only $19.18. If the firm paid a total cash dividend of $2 12 during the year, what rate of return would you have earned if you had purchased the stock exactly one year ago? What would your rate of return have been if the firm had paid no cash dividend? The rate of return you would have earned is%. (Round to two decimal places) The rate of return you would have earned if the firm paid no cash dividend is% (Round to two decimal places.)
Healthy Foods just paid its annual dividend of $1.62 a share. The firm recently announced that all future dividends will be increased by 2.1 percent annually. What is one share of this stock worth to you if you require a rate of return of 15.7 percent? Can the calculator and excel solution be provided?
(Calculating rates of return) Blaxo Balloons manufactures and distributes birthday balloons. At the beginning of the year Blaxo's common stock was selling for $17.95 but by year end it was only $16.91. If the firm paid a total cash dividend of $1.76 during the year, what rate of return would you have earned if you had purchased the stock exactly one year ago? What would your rate of return have been if the firm had paid no cash dividend? The rate of return you would have earned is %. (Round to two decimal places.)
Your company follows the policy to pay all the free cashflow to equityholders via dividend. The free cashflow next year will be 6,000,000 USD and there are 2,000,000 shares outstanding. The dividend is expected to increase at a 5% rate. The company thinks to issue new equity for 4,000,000 USD at the end of the year to increase the amount paid out as dividend (note: the new shareholders will also receive the dividend). The levered return on equity is 16%. a) What will be the dividend paid next year?b) What will be the ex-dividend price next year?
Tarbox Tobacco Inc. is all equity financed and generates perpetual annual EBIT of $300. Assume that the EBIT, and all other cash flows, occur at year end and that we are currently at the beginning of a year. Assume that Tarbox has a 100% payout rate. Tarbox has 1, 500 shares outstanding. The stock holders of Tarbox require a return of 5%. Assume that the tax rate is 0%. What is the price per share for Tarbox stock? (Round to the nearest whole number.)
Good Food just paid its annual dividend of $4.63 a share. The firm recently announced that all future dividends will be increased by 3.8 percent annually. What is one share of this stock worth to you if you require a 16 percent rate of return?
Madrigal Inc. paid a $2 last year, and the stock is currently selling for $87. If investors require a 10% return on their investment from buying Madrigal stock, what growth rate would Madrigal have to provide the investors?
Miller Brothers Hardware paid an annual dividend of $3.25 per share last month. Today, the company announced that future dividends will be increasing by 4.72 percent annually. If you require a 16 percent rate of return, how much are you willing to pay to purchase one share of this stock today?
IoT Inc., is in the business of measuring Southwest Water’s water demand in Exeter. At the end of the year IoT is expected to pay a $4 dividend per share. It reinvests 40% of its earnings and is growing at 4% a year. a. Assume that IoT continues on this growth trend. What is the expected longrun rate of return from purchasing the stock at $100? b. What part of the price of $100 is attributable to the present value of growth opportunities? Briefly explain your calculations.
Nu-Tek, Inc. is expecting a period of intense growth so have decided to retain more of their earnings to help finance that growth. As a result they are going to reduce their annual dividend by 10 percent a year for the next three years. After that they will maintain a constant dividend of $.70 a share. Last year, the company paid $1.80 per share. What is the market value of this stock if the required rate of return is 13 percent?
Last year, Park Keeper Inc (PKI) earned $18 per shared and reinvested all of its earnings in the company. PKI expects earnins to grow at 20% for the next 3 years. At the end of year 3, PKI will distribute 25% of the year 3 earnings to investors. What do you expect the year 3 dividedends to be?

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