Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. 8b peter limited has 10 million outstanding shares

8b Peter Limited has 10 million outstanding shares, and the firm has no debt and...

50.1K

Verified Solution

Question

Finance

8b Peter Limited has 10 million outstanding shares, and the firm has no debt and the cost of equity is 10%. The company has $50 million excess cash and $x of other assets.

For the $50 million excess cash, the board is considering that whether it would be paid out as a special dividend or to use it to repurchase shares of the firm's stock. For the $x of other assets, it is expected that those assets could generate free cash flows of $40 million at the end of each year in the future, and the firm will pay out the entire amount of free cash flows as regular dividend at the end of each year.

Assume Peter Limited spent $50 million excess cash to pay a special dividend. Calculate the cum-dividend price of a share.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Q

You find that the polarity of microtubules in the alternate universe cilia is the opposite of...

Biology
Q

11 Ebola virus disease is feared because of the high a Incidence b Attack rate...

Biology
Q

typical neuron where do you find the voltage gated calcium channels Oon the dendrites O...

Biology
Q

3 9 V 4 12 V The current capacity of a fuse wire will not...

Physics
Q

34 Two sound waves move in the same direction If the average power transmitted across...

Physics
Q

Select the axis of symmetry and y-intercept of f (x) = -x + 4x +...

Basic Math
Q

Find the most general antiderivative for the function Antiderivative 4 Vx 5 x 1

Calculus
Q

Find the exact solutions of the equation in the interval 0 2 sin 2x cos...

Calculus
Q

Item10 8.33 points eBook References Check my work Check My Work button is now disabledItem...

Accounting
Q

5: Number the following budgets in the order they are generally prepared: Factory Overhead Budget...

Accounting
Q

8C. Assemble the following from previous continuous problems: (1) the governmental funds Balance Sheet and...

Accounting
Q

For any given interest rate, ________compounding will yield the highest effective annual rate. ...

Finance