Floral Textile Ltd. is a daughter company of the Lily Fashion House Group and currentlyunder a liquidation plan due to severe business contraction caused by the COVID 19pandemic. The company plans to pay total dividend of $3.5 million now and $ 8.5 millionone year from now as a liquidating dividend. The required rate of return for shareholdersis 13.5%. Calculate the current value of the firm’s equity in total and per share if the firmhas 2.5 million shares outstanding?

Floral Textile Ltd. is a daughter company of the Lily Fashion House Group and currentlyunder a liquidation plan due to severe business contraction caused by the COVID 19pandemic. The company plans to pay total dividend of $3.5 million now and $ 8.5 millionone year from now as a liquidating dividend. The required rate of return for shareholdersis 13.5%. Calculate the current value of the firm’s equity in total and per share if the firmhas 2.5 million shares outstanding?

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter15: Dividend Policy

Section: Chapter Questions

Problem 11P

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