Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. finance
  3. v. components manufacturing corporation (cmc) has

v. Components Manufacturing Corporation (CMC) has an all-common-equity capital structure. It has 200,000 shares of...

90.2K

Verified Solution

Question

Finance

v. Components Manufacturing Corporation (CMC) has an all-common-equity capital structure. It has 200,000 shares of $2 par value common stock outstanding. Future growth at a 6% rate is considered realistic, but that level would call for an increase in the dividend payout. Further, it now appears that new investment projects with at least the 14% rate of return required by CMCs stockholders (rs = 14%) would amount to only $800,000 for 2009 compared to a projected $2,000,000 of net income.

Required:

a. Assuming that the acceptable 2009 investment projects would be financed entirely by earnings retained during the year and assuming that CMC uses the residual dividend model, calculate DPS in 2009. b. What payout ratio does your answer to Part a imply for 2009? c. If a 60% payout ratio is maintained for the foreseeable future, what is your estimate of the present market price of the common stock? please give me answer quickly

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

Physics
1.2K views

Use principles of physics to solve the problem and then verify your answer using the simulation....

Biology
1.2K views

How does taking notes during a lecture support active listening A It helps you anticipate...

Biology
1.2K views

uestion 8 ich of the following conditions leads

Biology
1.2K views

Which of the following options is not available in Inser tab O Picture

Physics
1.2K views

A 150W solar PV panel produces 15V and 7A when it is connected to a...

Basic Math
1.2K views

3 What is the Domain of each of the following y 4 x 4 7...

Accounting
1.2K views

name: q1: as an accountant, you were provided with the following balances: the oceanx company,...

Accounting
1.2K views

Hackett Produce Supply is preparing its cash budget for April. The following information is available:...

Accounting
1.2K views

Carl and Elizabeth Williams are married filing jointly. They are 45 and 40 years old,...

Accounting
1.2K views

Heip Save & Exit SL Check my we Case X: $730, eee 34,000 46,920 Case...

Finance
1.2K views

Problem 16-12 Calculating WACC a. Weston Industries has a debt-equity ratio of 1.5. Its WACC...

Finance
1.2K views

Find the accumulated amount of 1000P after 5 yrs when deposited in a bank at...