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Karkas Cold Cuts Inc. has $20 of cash and analysts expect the company to generate $10 of free cash ...

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Karkas Cold Cuts Inc. has $20 of cash and analysts expect the company to generate $10 of free cash ...

Karkas Cold Cuts Inc. has $20 of cash and analysts expect the company to generate $10 of free cash flow at the end of the current year. The same amount of free cash is expected annually in perpetuity. Karkas is all equity financed and stock holders require a return of 10%. There are 200 shares outstanding. Karkas is considering a cash dividend of $0.10 per share. If it pays the dividend, then what will the stock price be after the dividend?

▸ $0.30

▸ $0.40

▸ $0.50

▸ $0.60

Textbook

Corporate Finance Online

Edition: 2^nd

Authors: Eakins, McNally

Read 60 times

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lii Author

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Smart ... Thanks!

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You make an excellent tutor!

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Correct

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