ACCOUNTING-The firm you are CEO of has a current period cash flow

ACCOUNTING-The firm you are CEO of has a current period cash flow

Question # 00129696 Posted By: solutionshere Updated on: 11/05/2015 01:12 AM Due on: 12/05/2015
Subject Business Topic General Business Tutorials:
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The firm you are CEO of has a current period cash flow of 2.1 million and pays no dividend. The present value of the company's future cash flow is $17.5 million. The company is entirely financed with equity and there are 500,000 shares outstanding. Assume the dividend tax rate is zero. What is the share price of your firm? Suppose you and the board announce a plan to pay 50 percent of the current cash flows as a dividend to its shareholders. How can a shareholder, who owns 1000 shares, achieve a zero pay-out policy on their own?
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    Tutorial # 00124127 Posted By: solutionshere Posted on: 11/05/2015 01:12 AM
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