Pharmecology is about to pay a dividend of $1-90 per share- Its a matu.docx

•Download as DOCX, PDF•

0 likes•3 views

Pharmecology is about to pay a dividend of $1.90 per share. Itâ€™s a mature company, but future EPS and dividends are expected to grow with inflation, which is forecasted at 3.00% per year. The nominal cost of capital is 9.75%. What is Pharmecologyâ€™s current stock price? (Do not round intermediate calculations. Round your answer to 2 decimal places.) What would be Pharmecologyâ€™s current stock price using forecasted real dividends and a real discount rate? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Solution a. b) .

Education

Pharmecology is about to pay a dividend of $1-90 per share- Its a matu.docx

JPMorgan Chase's stock performance has outpaced the S&P 500 over the past decade. The document analyzes JPMorgan's financial metrics like earnings per share, price-to-earnings ratio, dividend yield, and analysts' earnings estimates to understand the company's performance and provide context for investors. It also discusses how factors like buybacks impact the stock. Overall, the analysis suggests JPMorgan Chase's earnings are expected to continue growing, positioning the stock well for continued strong returns.

Financial Management1. On December 5, 2007, the common stock.docx

AKHIL969626

Financial Management 1. On December 5, 2007, the common stock of Google, Inc. (GOOG) was trading at $698.51. One year later, the shares sold for $283.99. Google has never paid a common stock dividend. What rate of return would you have earned on your investment had you purchased the shares on December 5, 2007? The rate of return you would have earned is what percent? 2. The common stock of Plaxo Enterprises had a market price of $10.44 on the day you purchased it just one year ago. During the past year, the stock paid a dividend of $1.43 and closed at a price of $11.66. What rate of return did you earn on your investment in Plaxo's stock? The rate of return you earned on Plaxo's stock is what percent? 3. Caswell Enterprises had the following end-of-year stock prices over the last five years and paid no dividends. Time:Caswell: 1 $9 2 14 3 10 4 7 5 9 a. Calculate the average rate of return for each year from the above information. b. What is the arithmetic average rate of return earned by investing in Caswell's stock over this period? c. What is the geometric average rate of return earned by investing in Caswell's stock over this period? d. Considering the beginning and ending stock prices for the five-year period are the same, which type of average rate of return best describes the annual rate of return earned over the period (arithmetic or geometric)? e. The annual rate of return at the end of year 2 is what percent? 4. Syntex is considering an investment in one of two stocks. Given the information that follows, which investment is better, based on the risk (the standard deviation) and return? Stock A Stock B Probability Return Probability Return 0.20 10% 0.10 -7% 0.60 16% 0.40 5% 0.20 21% 0.40 13% 0.10 20% Given the information in the table, what percent is the rate of return for Stock A? BBA 3301 Unit V Assignment Instructions: Enter all answers directly in this worksheet. When you are finished, select Save As, and save this document using your last name and student ID as the file name. Upload the data sheet to Blackboard as a .doc, .docx or .rtf file when you are finished. Question 1. (30 points total) Use this balance sheet and income statement from Carver Enterprises to complete parts a and b: a. (15 points) Prepare a common size balance sheet for Carver Enterprises. Complete the common-size balance sheet: (Round to one decimal place.) Common−Size Balance Sheet 2013 Cash and marketable securities $ 490 % Accounts receivable 5,990 Inventories 9,550 Current assets $ 16,030 % Net property plant and equipment 17,030 Total assets $ 33,060 % Accounts payable $ 7,220 % Short−term debt 6,800 Current liabilities $ 14,020 % Long−term liabilities 7,010 Total liabilities $ 21,030 % Total owners’ equity 12,030 Total liabilities and owners’ equity $ 33,060 % b. (15 points) Prepare a common-size income statement for Carver Enterprises. Com ...

ExxonMobil: An Owner's Manual

OneMarlandRoad

ExxonMobil's stock price and earnings per share can be used to calculate the company's price-to-earnings ratio of 15.99. This ratio represents how much it costs to buy $1 of the company's annual earnings. While ExxonMobil's quarterly dividends only account for around 61% of total earnings, its current dividend yield of 3.86% compares favorably to other large companies. Looking ahead, analysts expect the company's earnings to grow modestly in the current and next fiscal years.

1. Nicks Enchiladas Incorporated has preferred stock outstand.docx

jackiewalcutt

1. The document provides examples and explanations of stock valuation models, including the discounted dividend model and the constant growth model. 2. The constant growth model assumes dividends and stock prices will grow at a constant rate indefinitely. It provides a simplified equation to value a stock based on the next expected dividend, required rate of return, and long-term growth rate. 3. An example applies the constant growth model to value a stock with a $1.15 dividend growing at 8% annually and a required return of 13.4%, calculating the stock price as $23.

Qualcomm: An Owner's Manual for Investors

OneMarlandRoad

This document provides an overview of Qualcomm stock for investors, including key metrics like earnings per share, price-to-earnings ratio, dividend yield, and analysts' earnings estimates. It explains how to calculate Qualcomm's earnings yield from its P/E ratio and compares this yield to other investments. It also notes that Qualcomm pays out dividends accounting for around 55% of earnings and buys back stock, reducing its share count. In closing, it shows Qualcomm's past stock performance and analysts' projections for future earnings growth.

Home Depot: An Owners Manual for Investors

OneMarlandRoad

1.Which of the following is considered a hybrid organizational for.docx

elliotkimberlee

1.Which of the following is considered a hybrid organizational form? Corporation limited liability partnership sole proprietorship partnership 3. Teakap, Inc., has current assets of $ 1,456,312 and total assets of $4,812,369 for the year ending September 30, 2006. It also has current liabilities of $1,041,012, common equity of $1,500,000, and retained earnings of $1,468,347. How much long-term debt does the firm have? $1,844,022 $2,303,010 $2,123,612 $803,010 5. Efficiency ratio: Gateway Corp. has an inventory turnover ratio of 5.6. What is the firm's days's sales in inventory? 61.7 days 57.9 days 65.2 days 64.3 days 6. Leverage ratio: Your firm has an equity multiplier of 2.47. What is its debt-to-equity ratio? 1.74 0 0.60 1.47 8. Present value: Jack Robbins is saving for a new car. He needs to have $ 21,000 for the car in three years. How much will he have to invest today in an account paying 8 percent annually to achieve his target? (Round to nearest dollar.) $22,680 $26,454 $16,670 $19,444 9. PV of multiple cash flows: Ferris, Inc., has borrowed from their bank at a rate of 8 percent and will repay the loan with interest over the next five years. Their scheduled payments, starting at the end of the year are as follows—$450,000, $560,000, $750,000, $875,000, and $1,000,000. What is the present value of these payments? (Round to the nearest dollar.) $2,735,200 $2,615,432 $2,431,224 $2,815,885 10. PV of multiple cash flows: Ajax Corp. is expecting the following cash flows—$79,000, $112,000, $164,000, $84,000, and $242,000—over the next five years. If the company's opportunity cost is 15 percent, what is the present value of these cash flows? (Round to the nearest dollar.) $480,906 $414,322 $477,235 $429,560 11. Future value of an annuity: Jayadev Athreya has started on his first job. He plans to start saving for retirement early. He will invest $5,000 at the end of each year for the next 45 years in a fund that will earn a return of 10 percent. How much will Jayadev have at the end of 45 years? (Round to the nearest dollar.) $3,594,524 $5,233,442 $1,745,600 $2,667,904 12. Serox stock was selling for $20 two years ago. The stock sold for $25 one year ago, and it is currently selling for $28. Serox pays a $1.10 dividend per year. What was the rate of return for owning Serox in the most recent year? (Round to the nearest percent.) 40% 12% 16% 32% 13. Bond price: Regatta, Inc., has six-year bonds outstanding that pay a 8.25 percent coupon rate. Investors buying the bond today can expect to earn a yield to maturity of 6.875 percent. What should the company's bonds be priced at today? Assume annual coupon payments. (Round to the nearest dollar.) $1,066 $923 $972 $1,014 14. PV of dividends: Next year Jenkins Traders will pay a dividend of $3.00. It expects to increase its dividend by $0.25 in each of the following three years. If their required rate of return is 14 pe.

09 Chapter modelChapter 9. Stocks and Their Valuation (Models)This model is similar to the bond valuation models developed in Chapter 7 in that we employ discounted cash flow analysis to find the value of a firm's stock.THE DISCOUNTED DIVIDEND MODEL (Section 9-4)The value of any financial asset is equal to the present value of future cash flows provided by the asset. Stocks can be evaluated in two ways: (1) by finding the present value of the expected future dividends, or (2) by finding the present value of the firm's expected future free cash flows, subtracting the market value of the debt and preferred stock to find the total value of the common equity, and then dividing that total value by the number of shares outstanding to find the value per share. Both approaches are examined in this spreadsheet.When an investor buys a share of stock, he/she typically expects to receive cash in the form of dividends and then, eventually, to sell the stock and to receive cash from the sale. Moreover, the price any investor receives is dependent upon the dividends the next investor expects to earn, and so on for different generations of investors. The basic dividend valuation equation is:P0 =D1+D2+. . . .Dn( 1 + rs )( 1 + rs ) 2( 1 + rs ) nThe dividend stream theoretically extends on out forever, i.e., n = infinity. It would not be feasible to deal with an infinite stream of dividends, but if dividends are expected to grow at a constant rate, we can use the constant growth equation as developed in the text to find the value.CONSTANT GROWTH STOCKS (Section 9-5)In the constant growth model, we assume that the dividend will grow forever at a constant growth rate. This is a very strong assumption, but for stable, mature firms, it can be reasonable to assume that the firm will experience some ups and downs throughout its life but those ups and downs balance each other out and result in a long-term constant rate. In addition, we assume that the required return for the stock is a constant. With these assumptions, the price equation for a common stock simplifies to the following expression:P 0 =D 1( r s − g )The long-run growth rate (g) is especially difficult to measure, but one approximates this rate by multiplying the firm's return on equity by the fraction of earnings retained, ROE x (1 – Payout ratio). Generally speaking, the long-run growth rate is likely to fall between 5% and 8%.EXAMPLEAllied Food Products just paid a dividend of $1.15, and the dividend is expected to grow at a constant rate of 8.3%. What stock price is consistent with these numbers, assuming a 13.7% required return?D0$2.15g8.3%rs13.7%P0 =D1=D0 (1+g)=$2.33( rs − g )( rs − g )0.054P0 =$43.12STOCK PRICE SENSITIVITYOne of the keys to understanding stock valuation is knowing how various factors affect the stock price. We construct below a series of data tables and a graph to show how the stock price is affected by changes in the dividend, the growth rate, and rs. R ...

Compare and contrast design guidelines for a standing operator.docx

monicafrancis71118

Compare and contrast design guidelines for a standing operator and those for a sitting operator; include types of work and working height. In addition, discuss the elements of an ergonomic chair. Please see attached files and use information from them, use the following for reference: Bush, P. M. (2012). Ergonomics: Foundational principles, applications, and technologies. Boca Raton, FL: CRC Press. Minimum 200 words APA Style Format At least one in text citation Citation must have a reference From: yasser 7337 [email protected] Subject: Date: July 14, 2015 at 7:14 AM To: [email protected] Assume a portion of a firm's long-term funds includes either debt or preferred stock. Which of the following statements is correct? a. The firm must possess operating leverage, which means that a change in net income will result in a greater percentage change in earnings before interest and taxes (EBIT). b. The firm has financial leverage, which means that a change in sales will result in a greater percentage change in EBIT. c. The firm has financial leverage, which means that a change in EBIT will result in a greater percentage change in earnings per share (EPS). d. The firm doesn't have leverage, because leverage is created through the use of common equity financing only. e. None of the above is a correct answer. QUEST ION) 1 2)points))) Save)AnswerSave)Answer The portion of the firm's earnings that has been reinvested in the firm rather than paid out in dividends is called a. net income. b. retained earnings. c. reinvestment return. d. DRIP. e. gross margin. QUEST ION) 2 2)points))) Save)AnswerSave)Answer Tara is evaluating two mutually exclusive capital budgeting projects that have the following characteristics: Cash Flows Year Project Q Project R 0 $(4,000) $(4,000) 1 0 3,500 2 5,000 1,100 IRR 11.8% 12.0% If the firm's required rate of return (r) is 10 percent, which project should be purchased? a. Both projects should be purchased, because the IRRs for both projects exceed the firm's required rate of return. b. Neither project should be accepted, because the IRRs for both projects exceed the firm's required rate of return. c. Project Q should be accepted, because its net present value (NPV) is higher than Project R's NPV. d. Project R should be accepted, because its net present value (NPV) is higher than Project Q's NPV. e. None of the above is a correct answer. QUEST ION) 3 2)points))) Save)AnswerSave)Answer You have recently been hired to improve the performance of Multiplex Corporation which has been experiencing a severe cash shortage. As one part of your analysis, you want to determine the firm's cash conversion cycle. Using the following information and a 360-day year, what is your estimate of the firm's current cash conversion cycle? Current inventory = $120,000 Annual sales = $600,000 Accounts receivable = $160,000 QUEST ION) 4 9)points))) Save)AnswerSave)Answer 2)points))) Sav.

Chevron: An Owner's Manual for Investors

OneMarlandRoad

BBA 3301 Unit V AssignmentInstructions Enter all answers direct.docx

jasoninnes20

BBA 3301 Unit V Assignment Instructions: Enter all answers directly in this worksheet. When you are finished, select Save As, and save this document using your last name and student ID as the file name. Upload the data sheet to Blackboard as a .doc, .docx or .rtf file when you are finished. Question 1. (30 points total) Use this balance sheet and income statement from Carver Enterprises to complete parts a and b: a. (15 points) Prepare a common size balance sheet for Carver Enterprises. Complete the common-size balance sheet: (Round to one decimal place.) Common−Size Balance Sheet 2013 Cash and marketable securities $ 490 % Accounts receivable 5,990 Inventories 9,550 Current assets $ 16,030 % Net property plant and equipment 17,030 Total assets $ 33,060 % Accounts payable $ 7,220 % Short−term debt 6,800 Current liabilities $ 14,020 % Long−term liabilities 7,010 Total liabilities $ 21,030 % Total owners’ equity 12,030 Total liabilities and owners’ equity $ 33,060 % b. (15 points) Prepare a common-size income statement for Carver Enterprises. Complete the common-size income statement: (Round to one decimal place.) Common−Size Income Statement 2013 Revenues $ 30,020 % Cost of goods sold (19,950) Gross profit $ 10,070 % Operating expenses (7,960) Net operating income $ 2,110 % Interest expense (940) Earnings before taxes $ 1,170 % Taxes (425) Net income $ 745 % Question 2. (10 points total) Use this data table of Campbell Industries liabilities and owners' equity to complete parts a and b. a. (5 points) What percentage of the firm's assets does the firm finance using debt (liabilities)? (Round to one decimal place.) b. (5 points) If Campbell were to purchase a new warehouse for $1.3 million and finance it entirely with long-term debt, what would be the firm's new debt ratio? (Round to one decimal place.) Question 3. (10 points total) (Liquidity analysis)Airspot Motors, Inc. has $2,433,200 in current assets and $869,000 in current liabilities. The company's managers want to increase the firm's inventory, which will be financed using short-term debt. How much can the firm increase its inventory without its current ratio falling below 2.1 (assuming all other assets and current liabilities remain constant)? (Round to one decimal place.) Question 4. (10 points total) (Efficiency analysis)Baryla Inc. manufactures high quality decorator lamps in a plant located in eastern Tennessee. Last year the firm had sales of $93 million and a gross profit margin of 45 percent. a. (5 points) How much inventory can Baryla hold and still maintain an inventory turnover ratio of at least 6.3 times? (Round to one decimal place.) b. (5 points) Currently, some of Baryla's inventory includes $2.3 million of outdated and damaged goods that simply remain in inventory and are not salable. What inventory ratio must the good inventory maintain in order to achieve an overall turnover ratio of at least ...

BBA 3301 Unit V AssignmentInstructions Enter all answers direct.docx

garnerangelika

Apple Stock: A User's Manual

OneMarlandRoad

As an Apple shareholder, you are entitled to a portion of the company's earnings. Apple currently has a price-to-earnings ratio of 12.56, meaning it costs $12.56 to buy $1 of the company's annual earnings. This can be used to compare Apple's stock to other investments and derive its earnings yield of 8%. While individual shareholders do not receive all of Apple's earnings directly, they do receive quarterly dividend payments which currently yield 1.8% annually. Analysts expect Apple's earnings to continue growing in the current and next fiscal years.

BBA 3301 Unit V AssignmentInstructions Enter all answers direct.docx

JASS44

BBA 3301 Unit V AssignmentInstructions Enter all answers dire.docx

JASS44

1. As you may have noticed, remote work or work at home (or school

TatianaMajor22

1. As you may have noticed, remote work or work at home (or school at home) has suddenly become much more frequent! This discussion forum is designed to get you to use what we know about the nature of job satisfaction to think about the possible effects of remote work on employee job satisfaction and ways to manage the new world of remote work. Job Satisfaction is the emotional state resulting from the appraisal of one's job and job experiences. It is composed appraisals of 5 distinct facets of work. Job characteristics theory explains the factors that contribute to satisfaction with the work itself. Based on this understanding of job satisfaction, do you think working remotely will decrease employees' levels of job satisfaction, on average? What actions or policies and practices should managers and companies implement to maintain or improve employee job satisfaction in the context of remote working? 2. Which of the five competitive forces that shape strategy has the greatest influence on your project company? Explain how? 7 Duke Energy Warren Salvodon Ashford University BUS401 September 10, 2021 Part 1: Dividend Analysis Date Name Price Dividend Yield Annual growth rate 05/05/2021 Duke Energy Corp 100.54 3.82 - 2% 05/06/2020 Duke Energy Corp 80.31 3.75 - 3% 05/01/2019 Duke Energy Corp 89.81 3.64 - 4% 05/02/2018 Duke Energy Corp 79.76 3.49 - 4% 05/03/2017 Duke Energy Corp 82.59 3.36 - 4% 05/04/2016 Duke Energy Corp 80.18 3.24 4.54 3% 05/06/2015 Duke Energy Corp 76.81 3.15 3.77 2% 04/30/2014 Duke Energy Corp 74.58 3.09 4.48 1% 05/01/2013 Duke Energy Corp 74.78 3.03 4.75 4% 05/02/2012 Duke Energy Corp 64.20 2.97 4.50 3% 05/04/2011 Duke Energy Corp 56.16 2.91 5.45 3% The Most Recent 10, 5 and 3 Years Date Annual growth rate 05/05/2021 2% 05/06/2020 3% 05/01/2019 4% 05/02/2018 4% 05/03/2017 4% 05/04/2016 3% 05/06/2015 2% 04/30/2014 1% 05/01/2013 4% 05/04/2011 3% Period of Years Average dividend growth rate 10 yrs 3% 5 yrs 3.4% 3 yrs 3% Summary of the Dividend Growth The average dividend growth for the company has remained constant at 3% in both periods. However, the average growth over the last five years had a slight increase of 0.4% compared to other periods (Insider, 2021). During the previous ten years, the company’s average growth was impacted by the constant dividends it paid. It continuously inclined from 1% to 4%. Over the last five recent years, the average increased as it stagnated at 4% in about three consecutive years (Thakur, 2021). However, over the previous three recent years, the average dividend growth declined with the decline of dividends it paid during the period of years. Distinct Estimates of the Future Dividend Growth Rate Based on the Low-End Growth Rate and its dividend growth rate, the company has reached its minimum, and the only way is forward. It is likely to increase its dividend growth to 3%, and after another, it may jump to 4% when High-End Growth Rate is the concern. Howeve ...

Lecture 33 dividend decision

Kritika Jain

Here are my analyses of the expected dividend payout ratios for each company described: - A company with a large proportion of inside ownership, all of whom are high income individual: Medium/high payout ratio. High income insiders prefer current dividends. - A growth company with an abundance of good investment opportunities: Low payout ratio. Growth companies retain more earnings to fund good investment opportunities. - A company experiencing ordinary growth that has liquidity and much unused borrowing capacity: Medium/high payout ratio. With liquidity and borrowing capacity, it has flexibility to pay dividends while still investing for growth. - A company that experiences an unexpected drop in earnings from a trend: Low payout ratio. It

Fin 571 week 1 connect problem

assignmentsehelp

Account assignment

Erik Ong

This document analyzes the financial ratios of Starbucks Corporation from 2012-2013. It finds that the company's profitability declined over this period as return on equity and net profit margin decreased. However, the gross profit margin increased, indicating better control of costs of goods sold. Liquidity also weakened as the current ratio fell below the minimum requirement of 2:1. The document recommends against investing in Starbucks due to low profitability, stability, and an expensive share price with a high P/E ratio of 28.6.

Anıl Sural - WACC Calculation

Anıl Sural

1) The CFO provided information on the firm's capital structure, bond yields, stock prices, tax rates, and growth expectations to estimate the WACC. 2) The costs of debt, preferred stock, and retained earnings were calculated using the bond yield, dividend yield, CAPM, and DCF approaches. 3) The WACC was estimated to be 7.58% using a 40% weight on debt at 3.6%, 10% weight on preferred stock at 7.4%, and 50% weight on retained earnings at 10.08%.

Exam 1 Review1. Corporate GovernanceWhat are the poten.docx

elbanglis

Exam 1 Review 1. Corporate Governance What are the potential conflicts of interest that face a business and how do they manifest themselves in practice? Short answer or multiple choice questions. 2. Beta Regressions How would you use the intercept to measure stock price performance? What does the slope of the regression measure? What does the R squared of the regression tell you about risk? Jensen’s Alpha As we discussed in class, Bloomberg’s regressions require an adjustment to get to the correct Jensen’s Alpha. Past exams may have asked for that adjustment. Your exam will not. What is the annualized Jensen’s Alpha? Evaluate it. What is the estimate of the beta of the company based on the regression and what is the 95% confidence interval of that estimate? What is the annualized Jensen’s Alpha? Evaluate it. The annualized Jensen’s alpha is (1 + (-0.01258))12 - 1 = -14.09% The company did 14.09% worse than it ‘should have’, per year, given its riskiness and given the return on the market. What is the estimate of the beta of the company based on the regression and what is the 95% confidence interval of that estimate? The beta is 1.261 and the standard error of the beta is 0.298 The 95% confidence interval is +/- 2 standard deviations 1.261 +/- 2*0.298 -> 0.665 - 1.857 From betas to expected returns Beta is a measure of the market risk in an investment. The expected return on an equity investment, which is also the cost of equity, can be written as Cost of Equity = Risk-free Rate + Beta (Risk Premium) We will focus on the risk-free rate and the market risk premium in this question. Risk-free rates and Market Risk Premiums The risk-free rate should generally be long-term, default free and currency matched. The risk premium is often estimated from historical data. The risk premium can also be estimated from current market data, in which case it is called an implied equity risk premium. For emerging markets, an additional country risk premium may have to be added on. The country risk premium can be estimated Simply by added the default spread based on the country rating to the mature market risk premium In a more sophisticated way, by estimating the relative equity market volatility and then adjusting the default spread for this relative volatility. For investments across different countries, we can average the risk premiums in those countries (weighted by size of investment). Rather than using the beta from the regression, you decide to compute a bottom-up beta and you estimate that it is 1.10. (This is the levered beta.) Next you collect some data to use in estimating risk-free rates and country risk premiums You have estimated that the market risk premium for mature markets is 5.00%. Chile and Brazil have the same rating on their local currency bonds as they do on their foreign currency bonds. (Not the same rating as each other.) Estimate the US dollar cost of equity for LATAM’s Brazil ...

AssetsLiabilitiesTotal Reserves$50,000Demand Deposits$18.docx

fredharris32

Assets Liabilities Total Reserves $50,000 Demand Deposits $180,000 U.S. Government Bonds $110,000 Loans $20,000 Assume the balance sheet above is for Eastlandia National Bank. The reserve requirement is 20%. a. Given the current situation, how much money can Eastlandia National Bank lend to borrowers if it wants to keep all of its bonds? b. Based on your answer in part (a), how much additional money can Eastlandia National Bank create? (Remember, how means how and why.) c. Explain two reasons why the money supply may not increase by the amount you identified in part (b). Spring 2013 Due Wed May. 15 by 4pm (my office) 1) Describe (in detail) the three forms of underwriting. 2) You want to set up an education trust for a relative starting in 2014. The trust will pay $25,000 a year starting in year 2022 and ending in year 2025. The stated annual percentage rate is 8% compounded annually. a. How much will you have to invest in 2010 to achieve your objective? b. How much will you have to invest each year from 2012 – 2017 to achieve your objective? 3) Samuelson Plastics has 7.5 percent preferred stock outstanding. Currently, this stock has a market value per share of $52 and a book value per share of $38. What is the cost of preferred stock? 4) Tidewater Fishing has a current beta of 1.21. The market risk premium is 8.9 percent and the risk-free rate of return is 3.2 percent. By how much will the cost of equity increase if the company expands its operations such that the company beta rises to 1.50? 5) Penn Corporation does not currently pay dividends. It is expected to begin paying dividends in year three (3) with a $2.50 dividend. This dividend is expected to grow at a rate of 14% for three years and then 6% every year after that forever. The required return on Penn’s stock is 16%. Calculate the price of Penn’s stock today. 6) Suppose Primerica has just paid a dividend of $1.75 per share. Sales and profits for Primerica are expected to grow at a rate of 5% per year. Its dividend is expected to grow by the same amount. If the required return is 12%, what is the value of a share of Primerica in 6 years? 7) IPOs typically experience underpricing. Describe (1) what is underpricing, (2) the evidence that underpricing occurs (be sure to include real world numbers/examples), and (3) why does underpricing occur. 8) Adelson's Electric had beginning long-term debt of $42,511 and ending long-term debt of $48,919. The beginning and ending total debt balances were $84,652 and $78,613, respectively. The interest paid was $4,767. What is the amount of the cash flow to creditors? 9) You arrived at work today to see the CFO, COO and most of the company’s top management team taken away in handcuffs. The only executive who was not arrested was the newly appointed CEO. Before you can even reach your cube, the CEO calls you into his office to explain some incomplete project an ...

Solutions_to_Chapters_7_and_8_Problem_Sets.ppt

Sanjay Gupta

Financial Corporation wants to acquire Great Western and estimates its enterprise value at $104 million. Great Western has $15 million in long-term debt and $3 million in excess cash. It also has unused licenses worth $4 million but faces $2.5 million in potential litigation costs. With 2 million shares outstanding, the implied takeover price per share is $45 million divided by 2 million shares, or $22.50 per share.

Solutions_to_Chapters_7_and_8_Problem_Sets.ppt

PrashantRandiwe

The CFO is trying to determine a fair value for PrivCo, a private firm BigCo wants to acquire. Comparable public firms Ion and Zenon trade at PE ratios of 20 and 15 respectively and EBITDA multiples of 10 and 8 respectively. PrivCo is expected to have $4M net income and $8M EBITDA next year. Based on average comparable multiples, PrivCo's value would be $91M using PE and $93.6M using EBITDA, both including a 30% premium. LAFCO's automotive and aircraft valve lines are becoming obsolete with declining cash flow and high leverage. Comparable transactions valued automotive valves at 10x EBITDA of $

Solutions_to_Chapters_7_and_8_Problem_Sets.ppt

kajukatli5

BBA 3310 Unit VI AssignmentInstructions Enter all answers.docx

JASS44

BBA 3310 Unit VI Assignment Instructions: Enter all answers directly in this worksheet. When finished select Save As, and save this document using your last name and student ID as the file name. Upload the data sheet to Blackboard as a .doc, .docx or .rtf file when you are finished. Question 1: (10 points). (Bond valuation) Calculate the value of a bond that matures in 12 years and has $1,000 par value. The annual coupon interest rate is 9 percent and the market's required yield to maturity on a comparable-risk bond is 12 percent. Round to the nearest cent. The value of the bond is $814.17 Question 2: (10 points). (Bond valuation) Enterprise, Inc. bonds have an annual coupon rate of 11 percent. The interest is paid semiannually and the bonds mature in 9 years. Their par value is $1,000. If the market's required yield to maturity on a comparable-risk bond is 14 percent, what is the value of the bond? What is its value if the interest is paid annually and semiannually? (Round to the nearest cent.) a. The value of the Enterprise bonds if the interest is paid semiannually is $ 849.11 b. The value of the Enterprise bonds if the interest is paid annually is $ 851.61 Question 3: (10 points). (Yield to maturity) The market price is $750 for a 20-year bond ($1,000 par value) that pays 9 percent annual interest, but makes interest payments on a semiannual basis (4.5 percent semiannually). What is the bond's yield to maturity? (Round to two decimal places.) The bond's yield to maturity is 6.20 % Question 4: (10 points). (Yield to maturity) A bond's market price is $950. It has a $1,000 par value, will mature in 14 years, and has a coupon interest rate of 8 percent annual interest, but makes its interest payments semiannually. What is the bond's yield to maturity? What happens to the bond's yield to maturity if the bond matures in 28 years? What if it matures in 7 years? (Round to two decimal places.) The bond's yield to maturity if it matures in 14 years is 4.31 % The bond's yield to maturity if it matures in 28 years is 4.23 % The bond's yield to maturity if it matures in 7 years is 4.49 % Question 5: (15 points). (Bond valuation relationships) Arizona Public Utilities issued a bond that pays $70 in interest, with a $1,000 par value and matures in 25 years. The markers required yield to maturity on a comparable-risk bond is 8 percent. (Round to the nearest cent.) For questions with two answer options (e.g. increase/decrease) choose the best answer and write it in the answer block. Question Answer a. What is the value of the bond if the markers required yield to maturity on a comparable-risk bond is 8 percent? $ 893.252 b. What is the value of the bond if the markers required yield to maturity on a comparable-risk bond increases to 11 percent? $ 663.13 c. What is the value of the bond if the market's required yield to maturity on a comparable-risk bond decreases to 7 percent? $1000 d. The change in the value of a bond caused by ch ...

Please identify hardware device(s) (peripherals) and describe how a NO.docx

Pharmecology is about to pay a dividend of $1-90 per share- Its a matu.docx

Recommended

Recommended

More Related Content

Similar to Pharmecology is about to pay a dividend of $1-90 per share- Its a matu.docx

Similar to Pharmecology is about to pay a dividend of $1-90 per share- Its a matu.docx (20)

More from rtodd19

More from rtodd19 (20)

Recently uploaded

Recently uploaded (20)

Pharmecology is about to pay a dividend of $1-90 per share- Its a matu.docx