Questions from Corporate Finance

Q: Hudson Corporation will pay a dividend of $3.28 per share

Hudson Corporation will pay a dividend of $3.28 per share next year. The company pledges to increase its dividend by 3.75 percent per year indefinitely. If you require a return of 10 percent on your i...

Q: Grateful Eight Co. is expected to maintain a constant 3.7

Grateful Eight Co. is expected to maintain a constant 3.7 percent growth rate in its dividends indefinitely. If the company has a dividend yield of 5.6 percent, what is the required return on the comp...

Q: Suppose you know that a company’s stock currently sells for

Suppose you know that a company’s stock currently sells for $74 per share and the required return on the stock is 10.6 percent. You also know that the total return on the stock is evenly divided betwe...

Q: The put-call parity condition is altered when dividends are paid.

The put-call parity condition is altered when dividends are paid. The dividend adjusted put-call parity formula is:S × e dt + P =E × e Rt + Cwhere d is again the continuously compounded dividend yield...

Q: Burnett Corp. pays a constant $8.25 dividend on its stock.

Burnett Corp. pays a constant $8.25 dividend on its stock. The company will maintain this dividend for the next 13 years and will then cease paying dividends forever. If the required return on this st...

Q: Bedekar, Inc., has an issue of preferred stock outstanding that

Bedekar, Inc., has an issue of preferred stock outstanding that pays a $3.40 dividend every year in perpetuity. If this issue currently sells for $91 per share, what is the required return?

Q: Red, Inc., Yellow Corp., and Blue Company each will pay

Red, Inc., Yellow Corp., and Blue Company each will pay a dividend of $3.65 next year. The growth rate in dividends for all three companies is 4 percent. The required return for each company’s stock i...

Q: What is the payback period for the following set of

What is the payback period for the following set of cash flows?Year …………………………………………………………………………………….. Cash Flow0 ……………………………………………………………………………………………. −$8,3001 ………………………………………………………………………………………….……. 2...

Q: What is the IRR of the following set of cash

What is the IRR of the following set of cash flows? Year ……………………………………………………………………………………… Cash Flow0 …………………………………………………………………………………………… −$15,4001 ………………………………………………………………………………………………… 7,3002 …………………...

Q: Spartan Credit Bank is offering 8.1 percent compounded daily on

Spartan Credit Bank is offering 8.1 percent compounded daily on its savings accounts. If you deposit $6,500 today, how much will you have in the account in 5 years? In 10 years? In 20 years?