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1) A company's stock sells at a P/E ratio of 21 times earnings. It is expected to pay dividends of $2 per share in each of the next five years and to generate an EPS of $5 in year 5. Using the "dividends-and-earnings model" and a 12% discount rate, compute the stock's justified price.
2) A particular company currently has sales of $250 million; sales are expected to grow by 20%, next year (year 1). For the year after next (year 2), the growth rate in sales is expected to equal 10%. Over each of the next two years, the company is expected to to have a net profit margin of 8% and a payout ratio of 50% and to maintain the common stock outstanding at 15 million shares. The stock always trades at a P/E of 15 times earnings, and the investor has a required rate of return of 20%. Given this information:a) Find the stock's intrinsic value (justified price).b) Use the IRR approach to determine the stock's expected return, given that it iscurrently trading at $15 per share.c) Find the holding period returns for this stock for year 1 and for year 2
Discuss the Capital budgeting and what is the net present value of the costs of buying and operating the ambulance over its lifetime
A corporation has decided to provide the pension for key employee who is scheduled to retire in 12 years-What should the annual payments be in order to fund this pension?
Bet'R Bilt Bikes just announced that its yearly dividend for this coming year will be $2.42 a share and that all future dividends are expected to increase by 2.5% yearly.
Suppose that two years after the bonds were issued, the required interest rate fell to 7 percent. What would be the bond's value?
The present value of the following cash flow stream is $6,785 when discounted at 10 percent annually. Find the value of the missing cash flow?
Assume you short-sell 100 shares of IBM, now selling at $178 per share. What happens to the maximum loss if you simultaneously place a stop purchase order at $192.50?
Summerdahl Resorts common stock is currently trading at $36 a share. The stock is expected to pay a dividend of $3.00 a share at the end of the year (D1=$3.00, and the dividend is expected to grow at a constant rate of 5% a year. What is the cost ..
Evaluate the standard deviation of this portfolio and please enter your answer as a percentage to three decimal places
Kellogg Co. agreed to acquire Keebler Foods Co. for $3.86 billion, or $42 per share. What were Kellogg's objectives in the acquisition?
Assume England raised its corporate tax rate by 1 percentage point from 40% to 41%. How would this raise affect the economics of U.S.-U.K. foreign expansion project?
Jordan wants to retire in 15 years when he turns 65. Jordan wants to have enough money to replace 75% of his current income less what he expects to receive from Social Security at the beginning of each year. Determine the correct statement
Identification of capital and revenue expenditure and A new machine was accidently damaged during installation
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