Estimate of appropriate price range for the shares of grap

Assignment Help Financial Management
Reference no: EM131329465

Garrett Simpson Investments^is evaluating a firm (Garp, Inc.) for recommendation to its clients and trying to evaluate the firm's current stock price. The firm is about to offer its shares to the public and had earnings last year of $2.50 a share, which the analysts believe is expected to grow by 20% next year. Similar firms in the industry are currently selling for price-earnings ratios ranging from ten to fifteen times current period earnings. However, these competitor firms are already public entities and have relatively low growth expectations for their earnings. What is your estimate of an appropriate price range for the shares of Garp? Defend your answer.

Reference no: EM131329465

Questions Cloud

What is net present value of this project : You can invest in a stream of cash flows that requires a $25,000 investment today + promises to pay 5000 for the next 3 yrs + 8000 for the subsequent 3 yrs. If you have a cost of capital of 3% what is the net present value of this project?
What is the estimated cost of the replacement : The construction equipment that Armstrong Inc. purchased in 2008 for $M must be replaced in 2012. What is the estimated cost of the replacement? SmartBook Inc. calculates the shipping cost for online orders as follows: a flat fee of $P for each order..
Determine which type of storage space should be used : A manufacturing company is in need of 1000 square meters of storage space for 3 years. The company is considering the purchase of land for $8 000 and erecting a temporary metal structure on it at a cost of $70 per square meter. Using Present Worth An..
Standard deviation of return on client portfolio : You manage an equity fund with an expected risk premium of 14% and a standard deviation of 54%. The rate on Treasury bills is 6.8%. Your client chooses to invest $120,000 of her portfolio in your equity fund and $30,000 in a T-bill money market fund...
Estimate of appropriate price range for the shares of grap : Garrett Simpson Investments^is evaluating a firm (Garp, Inc.) for recommendation to its clients and trying to evaluate the firm's current stock price. The firm is about to offer its shares to the public and had earnings last year of $2.50 a share, wh..
How much did the company spend on new property : At the end of fiscal year 2014, Emerson Electric Co. (EMR) had net property, plant, and equipment equal to $3.5 billion. The ending balance for 2013 was $3, 507 billion, and the firm had depreciation expense during 2014 equal to $0.727 billion. How m..
Using the high-low method to estimate costs : On November 15, 2009, Sandra Cook, a newly hired cost analyst at Demgren Company, was asked to predict overhead costs for the company's operations in 2010 when 530 unites are expected to be produced. She collected the following quarterly data: Using ..
Find the coefficient of variation of the stock : Pick one stock listed in the UAE of your choice and gather weekly closing price and dividend information using the Dubai Financial Market or Abu Dhabi Securities Exchangefrom the period of January 2015 to December 2015. You need to obtain holding wee..
What is their covariance : Security X has expected return of 12% and standard deviation of 20%. Security Y has expected return of 15% and standard deviation of 27%. If the two securities have a correlation coefficient of 0.7, what is their covariance?

Reviews

Write a Review

 

Financial Management Questions & Answers

  Compute the marginal cost of capital schedule for ml

Matsumoto Limited (ML), a large conglomerate firm. Compute the marginal cost of capital schedule for ML, and determine the break points in the schedule.

  Graph the supply and demand curves for real money balances

Graph the supply and demand curves for real money balances. Explain what happens to the interest rate in each of the given situations:

  What is the operating cash flow of this project based

A project will reduce costs by $13,200 but increase depreciation by $6,200. What is the operating cash flow of this project based on the tax shield approach if the tax rate is 27.9 percent?

  Calculate your monthly payments for next seven years

Five years ago you signed a loan contract with a repayment of 12 years at a fixed rate of 7.5%. You have made all your monthly payments so far and at present have a balance of $125000. The current market rate is 6.25% but you are obliged to continue ..

  Calculate cost of setting up the butterfly spread position

Use the DerivaGem software to calculate the cost of setting up the butterfly spread position. -  Show that the cost is the same if European put options are used instead of European call options.

  Free cash flow-investment in operating capital

Free Cash Flow Catering Corp. reported free cash flows for 2008 of $8.18 million and investment in operating capital of $2.18 million. Catering listed $0.91 million in depreciation expense and $2.18 million in taxes on its 2008 income statement. What..

  What is its WACC if equity-preferred stock

Micro Spinoffs, Inc., issued 10-year debt a year ago at par value with a coupon rate of 5%, paid annually. Today, the debt is selling at $1,210. The firm’s tax bracket is 20%. Micro Spinoffs also has preferred stock outstanding. The stock pays a divi..

  Calculate bond yield to maturity if its current market price

(Yield to maturity) Citigroup has outstanding an issue of $1,000.00 face value, 8.45% coupon bonds which mature in 16 years. Calculate the bond's yield to maturity if its current market price is. 800, 1, 000, 1,150 1,300

  Calculating return-calculate your total return for last year

Calculating returns: Last year you bought a share of 7.25 percent preferred stock for $63.75. Your stock's market price is now $66.92. Calculate your total return for last year.

  What was the gift tax

In 2010, mike gave $13,000 worth of ABC stock to his son, In 2014, the ABC shares are worth $25,000. What was the gift tax in 2010? AND What is the total amount removed from mikes estate in 2014?

  Problems with aggregate demand or with aggregate supply

Was Romer arguing that the high unemployment in 2010 was largely due to problems with aggregate demand or to problems with aggregate supply? Briefly explain.

  Calculate the firms operating and cash cycles

Using the information below, calculate the firm’s operating and cash cycles.

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!

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