A firm has an excess cash flow of $4.8m. It had 3m shares outstanding and was...

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A firm has an excess cash flow of $4.8m. It had 3m shares outstanding and was considering paying a cash dividend, correspondi

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Answer 1

Answer #1

Solution :-

Total Current Market Value = Number of share * Price per share

= 3,000,000 * $88

= $264,000,000

Now, The Dividend Paid Out = Excess Cash Flow * Dividend Payout

= $4,800,000 * 40%

= $1,920,000

So, Market Cap after Dividend Paid out = $264,000,000 - $1,920,000

= $262,080,000

So, Price per share = Market Cap / Number of share

= $262,080,000 / 3,000,000

= $87.36 Per share

Average Number of Share = 131

So, value of Portfolio = 131 * $87.36

= $11,444.16

= $11.444 K

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Answer 2

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