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- Download: http://solutionzip.com/downloads/summit-systems/
- Summit Systems has an equity cost of capital of 11%, will pay a dividend of $1.50 in one year
- & its dividends had been expected to grow by 6% per year. You read in the paper that Summit has
- revised its growth prospects & now expects its dividends to grow at a rate of 3% per year for ever.
- Required:
- a) What is the drop in the value of a Summit Systemβs share based on this information?
- b) If you tried to sell your Summit Systems shares after reading the news, what price would you
- be likely to get? Why?
- Q.2 The mortgage on your house is five years old. It required monthly payments of $1402, had
- an original term of 30 years & had an interest rate of 10%. In the intervening five years, interest
- rates have fallen & so you have decided to refinance- that is, you will roll over the outstanding
- balance into a new mortgage. The new mortgage has a 30-year term, requires monthly payments &
- and has an interest rate of 6.625
- Download: http://solutionzip.com/downloads/summit-systems/
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