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

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

80.2K

Verified Solution

Question

Finance

8c 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 repurchase shares. Calculate the regular dividend per share at the end of each year in the future.

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