Bakery co. make these assumptions for valuation purposes: a. The firm consists of a single asset that will generate pretax net cash flows of P3,000,000 per year forever. b. The income tax rate is 25%. c. After making paying taxes, the firm pays dividends to distribute any remaining cash flows to the equity shareholders each year. d. Equity shareholders have financed the asset entirely with P100,000,000 of equity capital. e. The cost of equity capital is 12%. 1. Compute for the dividend amount each year to the shareholders. 2. Compute for the dividend amount each year to the shareholders.
Bakery co. make these assumptions for valuation purposes: a. The firm consists of a single asset that will generate pretax net cash flows of P3,000,000 per year forever. b. The income tax rate is 25%. c. After making paying taxes, the firm pays dividends to distribute any remaining cash flows to the equity shareholders each year. d. Equity shareholders have financed the asset entirely with P100,000,000 of equity capital. e. The cost of equity capital is 12%. 1. Compute for the dividend amount each year to the shareholders. 2. Compute for the dividend amount each year to the shareholders.
Chapter9: Capital Budgeting And Cash Flow Analysis
Section: Chapter Questions
Problem 1P
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Bakery co. make these assumptions for valuation purposes:
a. The firm consists of a single asset that will generate pretax net
b. The income tax rate is 25%.
c. After making paying taxes, the firm pays dividends to distribute any remaining cash flows to the equity shareholders each year.
d. Equity shareholders have financed the asset entirely with P100,000,000 of equity capital.
e. The
1. Compute for the dividend amount each year to the shareholders.
2. Compute for the dividend amount each year to the shareholders.
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