Outstanding common stock is currently selling in the market

Assignment Help Financial Management
Reference no: EM131360872

Common stock? valuation) ?Wayne, Inc.'s outstanding common stock is currently selling in the market for ?$38. Dividends of ?$3.17 per share were paid last? year, return on equity is 33 ?percent, and its retention rate is 23 percent.

a .What is the value of the stock to? you, given a required rate of return of 18 ?percent?

b. Should you purchase this? stock?

Reference no: EM131360872

Questions Cloud

What will be its optimal cash replenishment level : Rose Axels faces a smooth annual demand for cash of $5.08 million, incurs transaction costs of $283 every time the company sells marketable securities, and can earn 5.1 percent on its marketable securities. What will be its optimal cash replenishment..
What is the expected return of the market : You own a stock that has an expected return of 15.72% and a beta of 1.33. The current U.S treasury bill is yielding 3.82 %. What is the expected return of the market?
Alpha industries is considering project with initial cost : Alpha Industries is considering a project with an initial cost of $7.4 million. The project will produce cash inflows of $1.54 million a year for seven years. The firm uses the subjective approach to assiR discount rates to projects. The debt-equity ..
What is your arithmetic average return : You purchased 300 shares of Ripon Inc. stock 5 years ago and have earned annual returns of 12.4 percent, 22.1 percent, 6.4 percent, -22.3 percent, and 8.8 percent. What is your arithmetic average return?
Outstanding common stock is currently selling in the market : ?Wayne, Inc.'s outstanding common stock is currently selling in the market for ?$38. Dividends of ?$3.17 per share were paid last? year, return on equity is 33 ?percent, and its retention rate is 23 percent. What is the value of the stock to? you, gi..
Issues only common stock and coupon bonds : Manteca Co. issues only common stock and coupon bonds. The firm has a debt-equity ratio of 1/3. The cost of equity is 13.7 percent and the pre-tax cost of debt is 9.4 percent. The tax rate is 35 percent. What is its weighted average cost of capital (..
Effective interest rate if the discount is not utilized : An important source of temporary cash is trade credit, which does not actually bring in cash, but instead slows its outflow. Vendors often provide discounts for early payment. What is the formula to determine the effective interest rate if the discou..
What is the firm target debt-equity ratio : The Patterson Inc. has a cost of equity of 16.5 percent and a pre-tax cost of debt of 9.4 percent. The firm's target weighted average cost of capital is 12 percent and its tax rate is 30 percent. What is the firm's target debt-equity ratio?
Callable bond-what is the yield to call : A company issues a 20-year, callable bond at par with a(n) 9% annual coupon rate. The bond can be called in three years or any time after that on a coupon payment date. The call price is $110 per $100 of face value. On issue it has a price equal to p..

Reviews

Write a Review

Financial Management Questions & Answers

  Determine the effective price at which you purchased coffee

Determine the effective price at which you purchased your coffee. How do you account for the difference in amounts for the spot and hedge positions?

  What assumptions does yield make regarding first coupon rate

What is the bond's yield to maturity? What assumptions does the yield make regarding the first coupon rate? Assume that in a year the one-year market rate is 3 percent . What is the return the bondholder will earn if she purchased the two-year bond t..

  How many shares will maggie be able to sell

How many shares will Maggie be able to sell if all SSC's shareholders tender their shares to the firm, as part of this repurchase program, and the company purchases shares on a pro rata basis?

  Determine the profit equations for the position

A short position in stock can be protected by holding a call option. Determine the profit equations for this position, and identify the breakeven stock price at expiration and maximum and minimum profits?

  About relationship between required return and stock price

Red Inc., Yellow Corp., and Blue Company each will pay a dividend of $3.25 next year. The growth rate in the dividends for all 3 companies is 4%. The required return for each company’s stock is 8%, 11%, & 14% respectively. What is the stock price for..

  Manufactures biotech sunglasses-variable cost per unit

Night Shades Inc. (NSI) manufactures biotech sunglasses. The variable materials cost is $10.60 per unit, and the variable labor cost is $5.90 per unit. What is the variable cost per unit? Suppose NSI incurs fixed costs of $580,000 during a year in wh..

  Shares of stock will be outstanding once the debt is issued

The Bethlehem Inn is an all-equity firm with 18,000 shares of outstanding at a value per share of $14.50. The firm is issuing $50,000 of debt and using the proceeds to reduce the number of outstanding shares. How many shares of stock will be outstand..

  Using one of the equity standards

Keller works within the City and County of Denver and lives in the suburbs. His employer deducts $6.00 per month from his salary for deposit in the Denver budgetary revenue accounts. Using one of the equity standards, develop an argument making a cas..

  What is this project equivalent annual cost

A five-year project has an initial fixed asset investment of $350,000, an initial NWC investment of $38,000, and an annual OCF of −$37,000. The fixed asset is fully depreciated over the life of the project and has no salvage value. If the required re..

  What is the value of the stock assuming growth

If ABC Corp has common stock and has just issued a dividend of $1.25 (Do) has a required rate of return of 13 ½ % and a growth rate of 9%. What is the value of the stock assuming growth? what would the dividends be in year 3 and year 5?

  Offered an investment that will pay you

You are being offered an investment that will pay you (and your heirs) $10,868 per year forever, starting 15 years from now. If your discount rate on this investment is 6.5 percent, how much would you be willing to pay for it today? Today you deposit..

  Please read the case revaluing the chinese yuan and respond

please read the case revaluing the chinese yuan and respond to this question 1-do you believe that the revaluation of

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