NAME: BHAVYA SHUKLA

ROLL NO.: DM22227

Individual Assignment 2
 1

Current Period Cash Flow 1200000

Expected Value of future Cash Flows till Perpetuity 1500000

No. of Outstanding shares 1000000

Cost of Capital 12%

A Share price of gibson stock

(Current cf + PV (perpetuity)) / total no of shares

pv (perpetuity) = cf perp / cost of cap

Share Price 13.7

B Div pay 50 percent of current cash flow

600000

div per share 0.6

Jeff Miller 600

C Ex div price share price - dividend

13.1
the price of share of share falls by the amount of dividend decl
y the amount of dividend declared
 2
Current price 45
Right issue 1 for 3
Subscription price 10
a) current holding value of share 45

b) new holding per share 36.25

c) ex- rights stock price 36.25
d) value of right 35
8.75
e) Yes, price will drop form 45 to 36.25 because the new share is sold at a price of 10.