What is your estimate of the current stock price

Assignment Help Financial Management
Reference no: EM13980746

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: EM13980746

Questions Cloud

What expectations about future inflation levels : The nominal yield on 10 year treasury bonds is currently ~4.9%. If an investor wishes to earn at least a 3.5% real before tax rate of return on her capital, what expectations about future inflation levels must she hold in order to willingly hold 1..
How circular flow diagram relates : Explain how the circular flow diagram relates to the current economic situation. Using the circular flow diagram, explain a way that your family interacts in the factor market and a way that it interacts in the products market.
Define the contemporary international division of labour : What do you understand by the term "contemporary international division of labour"? In your answer discuss how it is affecting patterns of production and distribution both between and within the developing and developed worlds.
What is the company days sales in receivables : A company has net income of $186,000, a profit margin of 7.9%, and an accounts receivable balance of $123,840. Assuming 70% of sales are on credit, what is the company's days' sales in receivables?
What is your estimate of the current stock price : 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. There are 5.5 million shares of stock outstanding. Investors require a return of 13 percent a..
What is the compounded annual rate implied : Payday loans are very short-term loans that charge very high interest rates. You can borrow $500 today and repay $590 in four weeks. What is the compounded annual rate implied by this 18 percent rate charged for only four weeks?
What is the present value of this annuity : You start making $135 monthly contributions today and continue them for five years. What is their future value if the compounding rate is 13 percent APR? What is the present value of this annuity?
What are the monthly payments if you only paid interest : You wish to buy a $14,000 dining room set. The furniture store offers you a five-year loan with a 11 percent APR. What are the monthly payments? What are the monthly payments if you only paid interest over the length of the loan and your principal ba..
Get a price that would pay off the balance of his loan : Hank purchased a $23,700 car three years ago using a 10 percent, 6-year loan with monthly payments. He has decided that he would sell the car now, if he could get a price that would pay off the balance of his loan. What's the minimum price Hank would..

Reviews

Write a Review

Financial Management Questions & Answers

  Genesisrsquo newly established operations management team

genesisrsquo newly established operations management team decided to seek outside assistance in developing a long-term

  What is the monthly mortgage payment on mortgage

Joi Chatman recently received her finance degree and has decided to enter the mortgage broker business. Rather than working for someone else, she will open her own shop. Her cousin Mike has approached her about a mortgage for a house he is building. ..

  Fixed rate mortgage with monthly payments

You are buying a house and will borrow $215,000 on a 30-year fixed rate mortgage with monthly payments to finance the purchase. Your loan officer has offered you a mortgage with an APR of 4.45 percent. What are the most points you would be willing to..

  Shareholders equal rights in the event of triggering event

Clint Wade owns 70 percent of the stock of Knock-Down Inc., a demolition and gravel supply company. The remaining 30 percent of the stock is owned in equal shares by three of the key managers of the business. The agreement gives all the shareholders ..

  Invest using mutual funds or other investment companies

Why would it be a good idea to invest using mutual funds or other investment companies rather than investing directly by you?

  Setup cost for the production process

The Handy Manufacturing Company manufactures small air conditioner compressors. The estimated demand for the year is 15,000 units. The setup cost for the production process is $250 per run, and the carrying cost is $10.00 per unit per year. The daily..

  During times of inflation-best for cash flow

During times of inflation, which of these inventory accounting methods is best for cash flow? LIFO, because the most expensive goods are recorded as being sold first, resulting in a higher cost of goods sold and a lower reported net income.

  Analyzing two machines

DeCento's is analyzing two machines to determine which one it should purchase. Whichever machine is purchased will be replaced at the end of its useful life. The company requires a 12 percent rate of return and uses straight-line depreciation to a ze..

  Traditional land lines and have gone completely wireless

What is Apple’s stock (Iphones & Ipads) selling for now and how does it relate to their stock price 15 years ago? Would you be happier with a stock portfolio containing Apple and Motorola as opposed to Sprint and BellSouth?  How many of us have aband..

  The internal rate of return for capital budgeting projects

The Internal Rate of Return for capital budgeting projects is best described as:

  What does the acronym tbtf refer to in banking terminology

What does the acronym TBTF refer to in banking terminology? Provide an example of a TBTF firm indicating what makes it TBTF.

  Demonstrated trends toward western-style consumption

China and India have demonstrated trends toward Western-style consumption over the last decade. Given the emphasis on the youth market in the US over the last 60 years (since the baby boom), what can you suggest for marketers in these youth-orient..

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