1. Canada milk successfully sell milks throughout the year. The income they receive covers all milk production costs, taxes, etc. and leaves enough cash to distribute among the stockholders. Based on the dividend and other income that the investors receive from Canada Milk, the return each year to the investors is equal to 14 percent. A $8.90 per-share dividend was paid by Canada Milk just one day ago. Mr. Canada Milk , the company's manager, has recently announced the company's plan to reduce its annual dividend payment by 4 percent. It is the general belief that this new dividend policy will continue forever. (Increase the decimal places and do not round your intermediate calculations. Only your final answer should be rounded to 2 decimal places, e.g., 42.13.) How much should it cost you to buy each share of Canada Milk's stock in today's market?
1. Canada milk successfully sell milks throughout the year. The income they receive covers all milk production costs, taxes, etc. and leaves enough cash to distribute among the stockholders. Based on the dividend and other income that the investors receive from Canada Milk, the return each year to the investors is equal to 14 percent. A $8.90 per-share dividend was paid by Canada Milk just one day ago. Mr. Canada Milk , the company's manager, has recently announced the company's plan to reduce its annual dividend payment by 4 percent. It is the general belief that this new dividend policy will continue forever. (Increase the decimal places and do not round your intermediate calculations. Only your final answer should be rounded to 2 decimal places, e.g., 42.13.)
How much should it cost you to buy each share of Canada Milk's stock in today's market?
2.
Your husband would like to try his luck and buy some stock shares, so he can have some additional dividend income in the near future. He wants to start with the stock of one company in the food field. This company paid a dividend equal to $4 per share just a couple of days ago. Your husband recently read an announcement on the company's website about their future dividend policy: the company's per-share dividend will be increasing each year by $4, again and again for the next 5 years. According to the same announcement, the company will then stop paying dividends. The investors who buy this company's shares are offered an expected annual return of 10 percent.
If your husband buys one share of this company's stock today, how much should he expect to pay? (Do not round your intermediate calculations. Round your final answer to 2 decimal places,
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