Determine the current price of shares, Cost Accounting

2. Blue-Jay Sporting Goods is a start-up company that expects to earn $3.00 per share next year. Since the firm currently retains 100 percent of earnings to finance future growth, no dividends will be paid on the stock during the next three years. Exactly four years from today, the firm expects to pay a dividend of $5.60 per share from earnings of $8.00 per share.

From date four on, Blue-Jay expects to reinvest retained earnings at an ROA of 15 percent. The required rate of return on the company's stock is 12.5 percent. Assuming that Blue-Jay will retain the same fraction of earnings and reinvest at the same ROA from year four on,

a. determine the current price of shares in Blue-Jay and

b. explain whether and why the price earnings ratio for Blue-Jay will increase or decrease over the next four years.

Posted Date: 2/23/2013 12:43:10 AM | Location : United States







Related Discussions:- Determine the current price of shares, Assignment Help, Ask Question on Determine the current price of shares, Get Answer, Expert's Help, Determine the current price of shares Discussions

Write discussion on Determine the current price of shares
Your posts are moderated
Related Questions
Bubba's Crawfish Processing Company uses a traditional overhead allocation based on direct labor hours. For the current year, overhead is estimated at $1,150,000, and direct labor

what is regression analysis and its applicability to the course of cost accounting

Q. Is there barely one way to conduct fca? Ans. No. It is significant for each area to put the FCA process in perception with its waste management goals. Every community w

PH plc operates a modern factory that changes chemicals into fertilizer. Due to the the demand for  its product  is  seasonal,  the  company expects  that  there will be an average

Savage Distribution markets CDs of performing artist Little Sister.  At the beginning of October, Savage had in beginning inventory 1,200 Little Sister's CDs with a unit cost of $5

Material Price Variance (MPV) This may be described as the difference amoung the actual price and the standard price of the materials consumed. MPV = Actual quantity used (S

Extracts from P Co''s records for last month are as follows: BUDGET ACTUAL PRODUCTION 7,000 UNITS 7,200 UNITS Direct Material $42,000 $42,912 Calculate

Lapsol limited manufacture electrical appliances for the export market. The management of the company are considering investing in one of two possible capital expenditure projects.

ANALYSIS OF VARIANCE When the actual are not similar from the standards, variance exists. Variance may be unfavorable or favorable. When the actual cost is more than the standa

The next year's budget for Benny, Inc., is given below: Product 1 & 2 Sales $945,000 & 688500 Variable costs 459,900 & 297,000 Fixed costs 300