Explain what is the current share price of the stock

Assignment Help Finance Basics
Reference no: EM13831620

Given the following cash flows calculate the IRR:

Year 0 1 2 3
-6000 2000 2000 2000
0.0%
-23.24%
15.89%

Given the following cash flows and a discount rate of 13 percent, calculate the NPV.

Year 0 1 2 3 4 5
-75000 25000 27500 30000 32500 35000
$28,381.29
$57,743.36
$75,000.00

DBP Inc. just paid a dividend of $1.00. The expected growth rate of dividend is 8 percent. The required return for investors in the first three years is 20 percent and 15 percent for the following three years. After those six years the required return is 10 percent. What is the current share price of the stock?

$36.98
$29.91
$28.94

Ernie Manufacturing has projected sales of $155 million next year. Costs are expected to be $100 million and net investment is expected to be $17.5 million. Each of these values is expected to grow at 14 percent the following year, with the growth rate declining by 2 percent per year until the growth rate reaches 6 percent where it will remain. There are 5.5 million shares of stock outstanding. Investors require a return of 13 percent and the corporate tax rate is 40 percent. What is your estimate of the current stock price?

$47.39
$43.59
$14.43

Reference no: EM13831620

Questions Cloud

Prepare the alternative projections : Extra customers will cause costs to increase in these categories: $2,000 in wages, $800 in supplies, $200 in administrative, $300 in repairs and $100 in utilities. Prepare the alternative projections.
Concept of corporate social responsibility : Discuss critically the extent to which you accept the concept of corporate social responsibility
Variables and graphing assessment practice : variables and graphing assessment practice
Continuing cookie chronicle : Use the following template for the journal entries from Chapter: Continuing Cookie Chronicle. NOTE: This is for your practice only - it will NOT be graded (solutions are found on the last tab marked "Solutions").
Explain what is the current share price of the stock : The expected growth rate of dividend is 8 percent. The required return for investors in the first three years is 20 percent and 15 percent for the following three years. After those six years the required return is 10 percent. What is the current ..
Discuss accounting issues that may be raised : Discuss the accounting issues that may be raised by the transfer of the water rights. Comment on whether or not the transfer of the water rights from the farm to the processing firm is going to be acceptable (explain).
Write a one page synopsis of the court decision : Conduct an Internet search of the most recent United States Supreme Court decision that you can find regarding law enforcement. Write a 1 page synopsis of the court decision
Australian competition and consumer commission : The case for study is AUSTRALIAN COMPETITION AND CONSUMER COMMISSION
Which is not be considered a supply shock : Consider two bonds, A and B. Both bonds presently are selling at their par value of $1,000. Each pay interest of $120 annually. Bond A will mature in 5 years while bond B will mature in 6 years. If the yields to maturity on the two bonds change fr..

Reviews

Write a Review

 

Finance Basics Questions & Answers

  What is the present value of your equity holdings

What is the present value of your equity holdings under the scenario where the firm plans to borrow $150K in the third year? How does this differ from your answer to a)? How does your answer contrast with the answer in Question 5? Explain the differe..

  Explain why the notes to a firmrsquos financial statements

explain why the notes to a firmrsquos financial statements are an integral part of the company.nbsp what kind of

  Amortization schedules- straight line and effective interest

Spencer Company sells 10 percent bonds having a maturity value of $300,000,000 for $2,783,724. The bonds are dated January 1, 2012, and mature January 1, 2017.

  What is the weighted average cost of capital

What is the weighted average cost of capital if the firms finances are in the following proportions?

  The funds ability to profit

Apex Inc., is a biotechnology company that is about to announce the results of its clinical trials of a potential new cancer drug. If the trials were successful, apnex stock will be worth $70 each share.

  What is the cost of new equity for this company\

What is the cost of new equity for this company, taking into account flotation costs?

  Compute the amount of funds that needs to be borrowed

problem 1. at the beginning of 2010 gonzales companys accounting records had the general ledger accounts and balances

  What is the p/e ratio

A stock is selling for $32 a share. There are 125,000 shares outstanding and the net income of the firm is $387,000. What is the P/E ratio?

  What is the eay of the bonds after issuance costs

8 years ago, your company issued $10M worth of 10-year semiannual bonds that pay a 10% coupon rate. The bond is currently selling for $1,030 per $1,000 bond. The issuance cost was 2%. Today, your firm borrows $8M in secured debt at 6% interest ..

  Provide a comprehensive analysis of the financial health

The final project for XACC 280 is a 1,750- to 2,050-word paper in which you provide a comprehensive analysis of the financial health of two companies, compare the companies, and make recommendations to improve the financial status of each. The ..

  Find company cost of preferred stock

Firm x's currently outstanding bonds have a 10 percent coupon and a 12 percent yield to maturity. company x believes it could issue new bonds at par that would provide a similar yield to maturity.

  Assume that portfolios a and b are well diversified and

assume that portfolios a and b are well diversified and that their expected rates of return are at 0.13 and 0.09

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