Quantitative Problem: After a 4-for-1 stock split, Perry Enterprises paid a dividend of $2.00 per...
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Quantitative Problem: After a 4-for-1 stock split, Perry Enterprises paid a dividend of $2.00 per new share, which represents a 8% increase over last year's pre-split dividend. What was last year's dividend per share? Round your answer to the nearest cent. $
Quantitative Problem: Lane Industries is considering three independent projects, each of which requires a $3.1 million investment. The estimated internal rate of return (IRR) and cost of capital for these projects are presented here:
Project H (high risk):
Cost of capital = 13%
IRR = 15%
Project M (medium risk):
Cost of capital = 11%
IRR = 9%
Project L (low risk):
Cost of capital = 8%
IRR = 9%
Note that the projects' costs of capital vary because the projects have different levels of risk. The company's optimal capital structure calls for 40% debt and 60% common equity, and it expects to have net income of $4,500,000. If Lane establishes its dividends from the residual dividend model, what will be its payout ratio? Round your answer to 2 decimal places. %
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