User Account

All Pages

Diversify into the home improvement field

Assignment Help Finance Basics
Reference no: EM131082550

Tyco Steel has decided to diversify into the home improvement field. As a result of this expansion, Tyco's beta value drops from 1.3 to 0.9, and the expected future long-term growth rate in the firm's dividends drops from 8 to 7%. The expected market return is 14%; the risk-free rate is 7%, and the current dividends per share, D0, are $3. Should Tyco undertake the planned diversification?

Reference no: EM131082550

Questions Cloud

Which uses less memory what is the dimension of each : . Which uses less memory? What is the dimension of each?
Original amount of the loan : A Bank makes a 360-month mortgage loan to a traditional (Prime) Borrower. The cost of the house was $250,000 and the original amount of the loan was $200,000. The Bank charged the Borrower an interest rate of 4.5%
Examine the time variable in the offline data : Try controlling for other variables that might affect this relationship.
Retained earnings and new borrowings : Maroon has 10 million shares of common stock outstanding. If all capital outlays are funded from retained earnings and new borrowings and if Maroon follows a residual dividend policy, what capital outlays are planned for the coming year?
Diversify into the home improvement field : Tyco Steel has decided to diversify into the home improvement field. As a result of this expansion, Tyco's beta value drops from 1.3 to 0.9, and the expected future long-term growth rate in the firm's dividends drops from 8 to 7%.
Determine whether these parameters should have default value : Use the find Globals () function available in code tools to check that the function is not relying on any global variables.
Expected to produce an internal rate of return : If the expansion is expected to produce an internal rate of return of 17%, should Nelson make the investment?
Value of woorhoos stock now : The Woorhoos Lock Company is planning a two-for-one stock split. You own 5,000 shares of Woorhoos common stock that is currently selling for $120 a share. What is the value of your Woorhoos stock now, and what will it be after the split?
How do the distributions change over the years : How do the distributions change over the years?

Reviews

Write a Review

Finance Basics Questions & Answers

  Prepare analysis and recommendations

You and your best friend have decided to quit your jobs, turn in your retirement, and purchase your own restaurant. In your market area there are a lot of restaurants, and you've looked at several that were available for sale.

  Discount rate and federal funds rate target

Refer to the latest 2 changes to the discount rate and federal funds rate target made by the U.S. Federal Reserve and discuss the following:

  What is the internal rate of return that turnbull can earn

turnbull corp. is in the process of constructing a new plant at a cost of 30 million. it expects the project to

  Which investment will earn her a higher interest rate

Jane smith is the 40% personal tax bracket. She is considering investing in ABC bonds that carry a 12% interest rate or tax exempt XYZ bonds that have a 6% interest rate. Which investment will earn her a higher interest rate?

  What is the rational expectations hypothesis

What is the rational expectations hypothesis, and how is it applied to tests of hypotheses about expected returns in financial markets?

  Find the percentage increase in firm earnings

A corporation has yearly sales of $14,000. Its variable costs equal 60% of its sales, fixed costs equal $1,000. If the company's sales increase 10 percent,

  What are the monthly payments

Bill Smith is borrowing $15,000 at 10% interest for 3 years. Payments are monthly and are calculated by using the add-on method. What are the monthly payments?

  What items in a business plan does a venture capitalist

what items in a business plan does a venture capitalist look for in deciding whether to provide initial

  A 20 year old student wants to save 3 a day for her

a 20 year old student wants to save 3 a day for her retirement. everyday she places 3 in a drawer. at the end of each

  Compare and evaluate these different types of income

how would you use the information you have learned in this class to develop your own investment portfolio? What investments would you hold, in what proportions, and why? What is your level of risk aversion?

  How much will you pay for a share today

The company will pay a $10 per share dividend in 10 years and will increase the dividend by 5% year thereafter. If the required an 11% return on the company's stock, how much will you pay for a share today?

  Calculate the total amount that needs to be in place

Based on the assumption that their first year retirement need, beginning on the first day of retirement, for annual income will be $85,000, of which they have $37,500 available from other sources, and an annual after-tax rate of return of 6.5%, ca..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd