Baggai Enterprises has an ROA of 10 percent, retains 30 percent of earnings, and has an equity multiplier of 1.25. Mondale Enterprises also has an ROA of 10 percent, but it retains two-thirds of earnings and has an equity multiplier of 2.00. Required What are the sustainable dividend growth rates for (A) Baggai Enterprises and (B) Mondale Enterprises?
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Baggai Enterprises has an
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- What are the sustainable
dividend growth rates for (A) Baggai Enterprises and (B) Mondale Enterprises?
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- Baggai Enterprises has an ROA of 10 percent, retains 30 percent of earnings, and has an equity multiplier of 1.25. Mondale Enterprises also has an ROA of 10 percent, but it retains two-thirds of earnings and has an equity multiplier of 2.00. What are the sustainable dividend growth rates for (A) Baggai Enterprises and (B) Mondale Enterprises? Identify the drivers of the difference in the sustainable growth rates of Baggai Enterprises and Mondale Enterprises.Dalton Inc. has a return on equity of 10.6 percent and retains 54 percent of its earnings for reinvestment purposes. It recently paid a dividend of $3.25 and the stock is currently selling for $42. a. What is the growth rate for Dalton Inc.? b. What is the expected return for Dalton's stock? c. If you require a 14 percent return, should you invest in the firm?Lamey Gardens has a dividend growth rate of 5.6 percent, a market price of $13.16 a share, and a required return of 14 percent. What is the amount of the last dividend this company paid?
- Arts and Crafts, Inc., will pay a dividend of $3 per share in 1 year. It sells at $50 a share, and firms in the same industry provide an expected rate of return of 12%. What must be the expected growth rate of the company’s dividends? (Do not round intermediate calculations. Enter your answer as a whole percent.)Sorenson Systems, Inc. is expected to pay a dividend of $3.30 at year end (D1), the dividend is expected to grow at a constant rate of 5.5% a year, and the common stock currently sells for $37.50 a share. The before-tax cost of debt is 7.5%, and the tax rate is 40%. The target capital structure consists of 45% debt and 55% common equity. What is the company's WACC if all the equity is used from retained earnings?Your answer should be between 7.36 and 12.57, rounded to 2 decimal places, with no special characters.CMW Cola is a large mature firm with total assets of $50 billion, total equity value of $40 billion, and 1 billion shares outstanding. Last year, CMW made $4.2 billion in net income and paid dividends of $3.5 billion. If the expected return on the firm's shares is 6%, what is the firm's value per share according to the steady-state dividend model? Give typing answer with explanation and conclusion
- Chadron Motors has a profit margin of 5 percent and a dividend payout ratio of 20 percent. The total asset turnover is 1.8 and the debt-equity ratio is .4. What is the sustainable rate of growth? A. 9.17 percent B. 9.84 percent C. 11.21 percent D. 10.52 percent E. 8.51 percent Chadron Co. wishes to maintain a growth rate of 9.89 percent a year, a constant debt-equity ratio of .42, and a dividend payout ratio of 40 percent. The ratio of total assets to sales is constant at 1.36. What profit margin must the firm achieve? A. 13.73 percent B. 14.37 percent C. 8.13 percent D. 14.79 percent E. 13.31 percent Chadron Markets is operating at full capacity with a sales level of $547,200 and fixed assets of $560,000. The profit margin is 5.4 percent. What is the required addition to fixed assets if sales are to increase by 4 percent? A. $14,680 B. $10,709 C. $18,840 D. $16,760 E. $22,400Chadron Motors has a profit margin of 5 percent and a dividend payout ratio of 20 percent. The total asset turnover is 1.8 and the debt-equity ratio is .4. What is the sustainable rate of growth? A. 9.17 percent B. 9.84 percent C. 11.21 percent D. 10.52 percent E. 8.51 percent Chadron Co. wishes to maintain a growth rate of 9.89 percent a year, a constant debt-equity ratio of .42, and a dividend payout ratio of 40 percent. The ratio of total assets to sales is constant at 1.36. What profit margin must the firm achieve? A. 13.73 percent B. 14.37 percent C. 8.13 percent D. 14.79 percent E. 13.31 percent Chadron Markets is operating at full capacity with a sales level of $547,200 and fixed assets of $560,000. The profit margin is 5.4 percent. What is the required addition to fixed assets if sales are to increase by 4 percent? A. $14,680 B. $10,709 C. $18,840 D. $16,760 E. $22,400. Please answer completeAmes Ltd has a dividend yield of 2 percent based on the current dividend and a mature phase dividend growth rate of 5 percent per year. The current dividend growth rate is 10 percent per year, but the growth rate is expected to decline linearly to its mature phase value during the next six years. If the shares of Ames are fairly priced in the marketplace, what is the implied cost of equity of the company? 4.7% 6.3% 7.4% None of the above
- Grateway, Inc., has a weighted average cost of capital of 11.5 percent. Its target capital structure is 55 percent equity and 45 percent debt. The company has sufficient retained earnings to fund the equity portion of its capital budget. The before-tax cost of debt is 9 percent, and the company’s tax rate is 30 percent. If the expected dividend next period (D1) and current stock price are $5 and $45, respectively, what is the dividendgrowth rate?Arts and Crafts, Inc. will pay a dividend of $4 per share in 1 year. It sells at $50 a share, and firms in the same industry provide an expected rate of return of 16%. What must be the expected growth rate of the company’s dividends?The ABC Corporation expects next year’s net income to be Taka 20 million. The firm’s debt ratio is currently 40%. It has Taka 15 million of profitable investment opportunities, and it wishes to maintain its existing debt ratio. According to the residual distribution model (assuming all payments are in the form of dividends), how large should Wei’s dividend payout ratio be next year? Provide your opinions on the following concepts: Dividend irrelevance theory; signaling theory, and clientele effect.
