What is the value of the security if required rate of return

Assignment Help Financial Management
Reference no: EM13949365

If an equity security has $7.00 earnings per share [EPS] that are expected to remain stable in perpetuity, and expects to maintain a 100% payout ratio to shareholders, what is the value of the security if its required rate of return = 14%?

Reference no: EM13949365

Questions Cloud

The gross return on assets and the expense ratio : Consider a hedge fund with $200 million at the start of the year. The benchmark S&P 500 index was up 16.5% during the same period. The gross return on assets is 21% and the expense ratio is 2%. For each 1% above the benchmark return the fund managers..
Two igneous rocks crystallized at different times : Two igneous rocks crystallized at different times at the same geographic location on a continent. One rock crystallized at 120 Ma and records a magnetic inclination of 68 degrees; the second rock crystallized at 65 Ma and records a magnetic inclin..
Prepare a document containing the logical design : State any assumptions you make about the problem, especially those required for correct interpretation of your diagram.
James has a prize race horse : James has a prize race horse named Mr. Ed.   James is in desperate need of some quick cash so he goes to a wealthy local horse trainer to see if he can borrow $50,000 from him.  The wealthy horse trainer agrees to loan the $50,000 to James, but wants..
What is the value of the security if required rate of return : If an equity security has $7.00 earnings per share [EPS] that are expected to remain stable in perpetuity, and expects to maintain a 100% payout ratio to shareholders, what is the value of the security if its required rate of return = 14%?
How much total interest is paid over the life of the loan : Amortization with Equal Payments [LO 3] Prepare an amortization schedule for a three-year loan of $81,000. The interest rate is 8 percent per year, and the loan calls for equal annual payments. How much total interest is paid over the life of the loa..
Relationship between years at company and job satisfaction : Does the regression support the claim that on average, employees with longer tenure at the company are more satisfied with their job, holding salaries and gender fixed? Use a 5% significance level.
Identify and explain the characteristics of reform policing : Identify and explain the characteristics of reform policing. why did reform era policing develop in the united state
Net earnings- payout ratio-retained earnings will increase : Which one of the following is correct for a firm with $400,000 in net earnings, 50,000 shares, and a 30% payout ratio? A. Retained earnings will increase by $120,000. B. Each share will receive a $1.20 dividend. C. $120,000 will be spent on new inves..

Reviews

Write a Review

 

Financial Management Questions & Answers

  How close could you get to a risk free investment with stock

How close could you get to a risk free investment with stocks? Are stocks inherently risky, so that a risk free return would not be possible?

  What is your annualized return from these two investments

Suppose you have $60,000 to invest. You’re considering Miller-Moore Equine Enterprises (MMEE), which is currently selling for $60 per share. You also notice that a call option with a $60 strike price and six months to maturity is available. MMEE pays..

  What do the terms core deposits and volatile

What do the terms core deposits and volatile, or noncore, deposits mean? Explain how a bank might estimate the magnitude of each.

  Value bond pays coupon rate

A $1000 par value bond pays a coupon rate of 8.2 percent. The bond makes semiannual payments, and it matures in four years. If investors require a 10 percent return on this investment, what is the bond's price?

  Firms future earnings prospects is called the hypothesis

The idea that dividend changes reflect managers' views about a firm's future earnings prospects is called the ________ hypothesis. Consider the following equation: C = P + S - PV(K) - PV(Div). In this equation, what does the term K represent?

  What is its times-interest-earned ratio

Graser Trucking has $10 billion in assets, and its tax rate is 30%. Its basic earning power (BEP) ratio is 20%, and its return on assets (ROA) is 6%. What is its times-interest-earned (TIE) ratio? Round your answer to two decimal places

  Annual earnings to finance reinvestments

Carew Inc. traditionally has retained 40% of its annual earnings to finance reinvestments. The firm has historically earned a real return of 11% per annum on its reinvestments. What should have been the price of Carew stock immediately before the ann..

  Value bond outstanding with coupon rate

Yan Yan Corp. has a $2,000 par value bond outstanding with a coupon rate of 4.9 percent paid semiannually and 23 years to maturity. The yield to maturity on this bond is 4.3 percent. What is the price of the bond?

  What is the present value of a five period annuity

What is the present value of a five period annuity of $1,000 if the interest rate is 10% and the first payment is made today?

  Arithmetic and geometric returns for the stock

A stock has had returns of 12 percent, 19 percent, 21 percent, −12 percent, 26 percent, and −5 percent over the last six years. What are the arithmetic and geometric returns for the stock?

  Intensive care urology practice not-for-profit business

Intensive Care Urology Practice (ICUP), a not-for-profit business, had revenues in 2015 of $144,000. Expenses other than depreciation were 75% of revenues and Depreciation was $15,000. Construct ICUP’s Income Statement. What was ICUP’s Cash Flow for ..

  Calculating annuity present value-an investment offers

Calculating Annuity Present value / An investment offers $1,500 per year for 12 years, with the first payment occurring one year from now. If the required return is 12 percent, what is the value of the investment? What would the value be if the payme..

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