Should R invest in this project?
Based on your results for part (j), discuss the effects of
leverage and its tax shields effects on the future value of the
Mr. Toriop owns 5,000 shares of stock in Yummy
Corporation. The company has announced that it will pay a
dividend of $5 per share in one year and a liquidating
dividend of $50 per share in two years. The required return
on ABC stock is 12%.
(21 marks total)
What is the current share price of your stock?
What will be the company’s share price in one year’s