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Eberhart Manufacturing has projected sales of $146.2 million next year. Costs are expected to be $81.6 million and net investment is expected to be $15.6 million. Each of these values is expected to grow at 16 percent the following year, with the growth rate declining by 2 percent per year until the growth rate reaches 8 percent, where it is expected to remain indefinitely. There are 6.1 million shares of stock outstanding and investors require a return of 15 percent return on the company’s stock. The corporate tax rate is 38 percent. (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16)) '
a. What is your estimate of the current stock price?
b. Suppose instead that you estimate the terminal value of the company using a PE multiple. The industry PE multiple is 10. What is your new estimate of the company’s stock price? Share price $
Dd a new line of bow ties that will require the acquisition of new knitting and tying machine. The machine will cost $1,000,000. It is classified as a 7-year MACRS asset and will be depreciated as such. Interest costs associated with financing the eq..
Your firm has taken out a $536,000 loan with 8.2% APR (compounded monthly) for some commercial property. As is common in commercial real estate, the loan is a 5-year loan based on a 15-year amortization. To do this, you will make 59 equal payments ba..
Calculate the? 95% confidence intervals for the four different investments included in the following table. Small Stocks ?S&P 500 Corporate Bonds ?T-Bills. The? 95% confidence interval of small stocks is between ____% and ____%. ?
Mr. Agirich of Aggie Farms is thinking about investing in a center pivot irrigation system to irrigate 100 acres of land. The irrigation system costs $70,000. Mr. Agirich expects that the irrigation system will increase yield and thus operating recei..
1,000 par value bond matures in 6 years, interest at 8%, 1150.00 market value, tax rate at 30%, and marginal tax rate at 36%. What is the firm after tax cost of debt?
Explain how a OBHC differs from a MBHC. How does each of these differ from a financial services holding company?
A student arrives in London on the first leg of a European vacation and promptly converts all his cash ($2,500) into pounds sterling (GBP). The rate quoted was 1.5696-700 dollars per pound. how much did he receive in pounds sterling on his arrival in..
A bank pays a quoted annual (simple) interest rate of 8 percent. However, it pays interest (compounds) daily using a 365-day year. What is the effective annual rate of return?
If a firm decreases its operating costs, all else constant, then: the profit margin increases while the equity multiplier decreases. the return on assets increases while the return on equity decreases. the total asset turnover rate decreases while th..
The operating cost of a new machine is $500 for the first year. Starting the second year, the operating cost increases by $200 per year for the next 10 years. Calculate the equivalent annual operating cost of the machine. What will be the present and..
Describe the setting and access to potential subjects. If there is a need for a consent or approval form, then one must be created. Describe the strategies to deal with the management of any barriers, facilitators, and challenges.
Roxanne invested $230,000 in a new business 9 years ago. The business was expected to bring in $2,000 each month for the next 18 years (in excess of all costs). The annual cost of capital (or interest rate) for this type of business was 9% with month..
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