User Account

All Pages

What do you conclude about the relationship

Assignment Help Managerial Accounting
Reference no: EM13940404

Web Cites Research projects a rate of return of 20% on new projects. Management plans to plow back 30% of all earnings into the firm. Earnings this year will be $3 per share, and investors expect a 12% rate of return on stocks facing the same risks as Web Cites.

a. What is the sustainable growth rate?

b. What is the stock price?

c. What is the present value of growth opportunities?

d. What is the P/E ratio?

e. What would the price and P/E ratio be if the firm paid out all earnings as dividends?

f. What do you conclude about the relationship between growth opportunities and P/E ratios?

Projected Rate of return..... 20.00%
Plow back ratio....... 30.00%
Earnings per share..... .... $3.00
Rate of return on stocks..... 12.00% 

Reference no: EM13940404

Questions Cloud

What is the likely outcome if leroy agrees to review the bid : What is the likely outcome if Leroy agrees to review the bid? Is there much risk to him personally if he reviews the bid? Should the degree of risk have any bearing on his decision?
Maintaining certain amount of debt on their balance sheets : Given a 35% corporate tax rate, for every $1 in new permanent debt that the firm issues, the value of the firm increases by $0.65. The firm’s marginal tax rate may fluctuate due to changes in the tax code and changes in the firm’s income bracket. Man..
Practices by utilizing sweatshop labor : Many companies have engaged in sweatshop labor. Did the clothing company engage in unethical labor practices by utilizing sweatshop labor?
Program to calculate the discount amount and total : calculate the discount amount and total and format and display the results
What do you conclude about the relationship : What would the price and P/E ratio be if the firm paid out all earnings as dividends? What do you conclude about the relationship between growth opportunities and P/E ratios?
Firms choice of securities does not change the cash flows : As long as the firm's choice of securities does not change the cash flows generated by its assets, the capital structure decision will not change the total value of the firm or the amount of capital it can raise. If securities are fairly priced, then..
Complete a swot analysis of gambling industry : Select an industry, such as the gambling industry, to complete a SWOT analysis. Access the profile overview for the selected industry: In the University Library, click Company Directory and Financials.
What is the default risk premium on the corporate bond : If 10-year T-bonds have a yield of 6.2%, 10-year corporate bonds yield 7.4%, the maturity risk premium on all 10-year bonds is 1.3%, and corporate bonds have a 0.4% liquidity premium versus a zero liquidity premium for T-bonds, what is the default ri..
Information provided regarding the forecasts : Given the actual financial statements below and the information provided regarding the forecasts, construct the income statement and balance sheet for CSR for 2014. You will need to work out the expected level of cash at the end of 2014 using the ..

Reviews

Write a Review

Managerial Accounting Questions & Answers

  Case study on auditing and assurance

CASE STUDY ON AUDITING AND ASSURANCE

  Identification of the professional accounting management

Identification of the professional accounting, management and/or public relations issues in your workplace. How do you applied knowledge from this degree study in solving your workplace problems, including appropriate analysis and justification.

  Perth corporation has two operating divisions

Perth Corporation has two operating divisions, a casino and a hotel. The two divisions meet the requirements for segment disclosures. Before transactions between the two divisions are considered, revenues and costs are as follows:

  What is the market value of the option?

What is the Market Value of the Option? What is the price of the underlying stock?

  The best in the history of the company

"In my opinion, it will be a mistake if that new plant is built," said Carl Roberts, controller of Tanka Toys. "Why, if that plant was in existence right now, we would be reporting a loss of $100,000 for the fiscal year (1995) rather than a profit, a..

  Cash payments on accounts payable

Determine the amounts - Cash collected from sales during Year 2 and cash payments on accounts payable during Year 2.

  Managerial accounting hw help i just need help not someone

i just need help not someone to do it for me. i have attached the

  Determine the cost per equivalent unit for direct materials

Determine the cost per equivalent unit for direct materials and for conversion costs using the weighted-average method.

  Data input section

The spreadsheet model should include a "Data Input Section" (whereby all raw / original data from the case should be entered), "Additional Information Section" (whereby other relevant information for the individual problems should be entered) and an ..

  Here are the budgets of brandon surgery center for the most

here are the budgets of brandon surgery center for the most recent historical quarter in thousands of dollarsstatic

  Trumbull value of debt and yield

Gomez computer systems has an EBIT of $200,000, a growth rate of 6%, and its tax rate is 40%. In order to support growth, Gomez must reinvest 20% of its EBIT in net operating assets. Gomez has $300,000 in 8% debt outstanding, and a similar company..

  Which manager is likely to see higher returns over a year

Which manager is likely to see higher returns over a 1-year investment horizon? Why? Which manager is likely to see higher returns over a 10-year investment horizon? Why?

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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