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In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the “terminal” stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $1.40. The dividends are expected to grow at 14 percent over the next five years. In five years, the estimated payout ratio is 40 percent and the benchmark PE ratio is 26.
What is the target stock price in five years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Target stock price $
What is the stock price today assuming a required return of 12 percent on this stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Stock price $
Which of the following was not an original responsibility of the Federal Reserve?
The Kalodop Corporation issues 12% annual coupon bonds that pay $1,000 at maturity. These bonds mature in 15 yrs. What is the value (PV) or (Vb) of the bonds if the current or market or prevailing or going or YTM is 10%.
A state highway department is planning the construction of a toll road. Construction cost will be $200M (at period=year 0). Annual maintenance is estimated to be $1M every year and forever. In addition, every 10 years in perpetuity (=forever), a majo..
If there is no chance of default what would be the price of this corporate bond? if there is no chance of default, then the required rates of return for money at various horizons is given by the Treasury zero yield curve above. Given these rates, wha..
The Perfect Rose Co. has earnings of $1.90 per share. The benchmark PE for the company is 14. What stock price would you consider appropriate? What if the benchmark PE were 17?
You invest $3,000 annually in a mutual fund that earns 10% annually, and you reinvest all the distributions. How much will you have in the account at the end of 20 years?
Fred has just sold short 3 contracts of May wheat on the CBT. These are 5,000 bushel contracts. The initial deposit is $1,500 per contract with a maintenance margin of $1,200. What is Fred's total initial margin? How much of an increase in the price ..
Walgreen’s stock went from $25 to $28 last year. Walgreen’s paid a 50 cent dividend. What is your holding period return (HPR)?
EMC Corporation has never paid a dividend. Its current free cash flow of $370,000 is expected to grow at a constant rate of 4.6%. The weighted average cost of capital is WACC = 11.5%. Calculate EMC's estimated value of operations. Round your answer t..
You are evaluating a project that costs $840,000, has seven-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 90,000 units per year. Price per unit is $40, vari..
americas current account ca deficit the trade deficit plus net income payments and netunilateral transfers rose as a
During the year, Belyk Paving Co. had sales of $2,394,000. Cost of goods sold, administrative and selling expenses, and depreciation expense were $1,431,000, $435,600, and $490,600, respectively. In addition, the company had an interest expense of $2..
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