Answer to Question #57808 in Finance for Noja

Question

1- Discuss the advantages and disadvantages of issuing common stock versus long-term debt?

2- The Ship Corp. has paid annual dividends of RM0.48, RM0.60, and RM0.62 a share over the past three years, respectively. The company now predicts that it will maintain a constant
dividend since its business has leveled off and sales are expected to remain relatively
constant. Given the lack of future growth, at what price will you only buy this stock if you
can earn at least a 14 percent rate of return?

3- Active Adventures will pay an annual dividend of RM3.15 a share on their common stock
next week. Last year, the company paid a dividend of RM3.00 a share. The company
adheres to a constant rate of growth dividend policy. What will one share of this common
stock be worth ten years from now if the applicable discount rate is 12.5 percent?