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You want to estimate the total intrinsic value of a large gas and electric utility company. This company has publicly traded stock and has been paying a regular dividend for many years. You decide that, due to the predictability of the dividend that this company pays, you can use the dividend discount valuation approach. The company is expected to pay a dividend of $1.40 per share next year, and the dividend is expected to grow at a rate of 5 percent per year thereafter. You estimate that the appropriate rate for discounting future dividends is 11 percent. In addition, you know that the company has 42 million shares outstanding and that the market value of its debt is $320 million. What is the total enterprise value of the company? (Round intermediate calculations and final answer to 2 decimal places, e.g. 15.25.)
The total value of the company is $_____________million.
Analyze the performance of Timco. This year: ATO=1.4, GPM=.26, EM=1.8, Interest Retention=.81, Tax Retention=.66. Last year: ATO=1.2, GPM=.29, EM=1.6, Interest Retention=.84, Tax Retention=.69.
How is profit maximization different from stock price maximization? Under what conditions might profit maximization not lead to stock price maximization?
A 20 year annuity certain provides payments of $200 at time 1 year, $180 at time 2 years , $160 at time 3 years, and so on until the payments have been reduced to $60. Payments then continue at $60 per year until the 20th payment has been made. The a..
The current spot rate between the U.K. and the U.S. is £0.5331 per $1. The expected inflation rate in the U.S. is 4.5%. The expected inflation rate in the U.K. is 3.6%. If relative purchasing power parity exists, the exchange rate next year will be:
Identify its growth in output per capita and in population growth - Is it an open or closed economy?
Bailey, Inc., is considering buying a new gang punch that would allow them to produce circuit boards more efficiently. The punch has a first cost of $60,000 and a useful life of 15 years. At the end of its useful life, the punch has no salvage value.
A project is expected to create operating cash flows of $33,000 a year for three years. The initial cost of the fixed assets is $68,000. These assets will be worthless at the end of the project. An additional $4,500 of net working capital will be req..
The following data apply to Saunders Corporation: Saunders Corporation currently has 1,000,000 common stocks outstanding. It considers raising $10 million through issuing 20-year 8% coupon bonds – annually paid - with 12 warrants. Each bond has a fac..
We will derive a two-state put option value in this problem. Data: S0 = 290; X = 300; 1 + r = 1.1. The two possibilities for ST are 330 and 180. a. The range of S is 150 while that of P is 120 across the two states. What is the hedge ratio of the put..
Miller's Dry Goods is an all equity firm with 48,000 shares of stock outstanding at a market price of $50 a share. The company's earnings before interest and taxes are $128,000. Miller's has decided to add leverage to its financial operations by issu..
Phillips Fine Fixtures Inc. wishes to issue new bonds but is uncertain how the market would set the yield to maturity. The bonds would be 20-year, 7% annual coupon bonds with a $1,000 par value. Fisher has determined that these bonds would sell for $..
You constructed a pro forma balance sheet for next year and found that external financing required was negative (i.e., the company projected a financing surplus). Which of the following options, all else equal, would NOT correct the projected imbalan..
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