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Sisters Corp expects to earn $7 per share next year. The firm’s ROE is 12% and its plowback ratio is 80%. If the firm’s market capitalization rate is 10%.
a. Calculate the price with the constant dividend growth model. (Do not round intermediate calculations.) Price $
b. Calculate the price with no growth. Price $
c. What is the present value of its growth opportunities? (Do not round intermediate calculations.) PVGO $
Mississippi River Shipyards is considering the replacement of an 8-year-old riveting machine with a new one that will increase earnings before depreciation from $30,000 to $52,000 per year. Should the old riveting machine be replaced by the new one?
Starbucks is planning to open a new store across from the student union. Annual revenues are expected to be $5 million. However, opening the new location will cause annual revenues to drop by $3 million at Starbucks’ existing stadium location. The re..
assume that you are the assistant to the cfo of xyz company.nbsp your task is to estimate xyzs wacc using the following
Short term financial planning for the pdc company was described earlier in this chapter. refer to the pdc company projected monthly operating schedule.
Your firm is contemplating the purchase of a new $560,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $56,000 at the end of that time. You will save $280,000 before..
ABC Corp. just issued some new preferred stock. The issue will pay a $3 quarterly dividend in perpetuity, beginning 12 years from now. If the market requires a 8% return on this investment, how much does a share of preferred stock cost today?
You have just completed your undergraduate degree, and one of your favorite courses was "Today's Entrepreneurs." In fact, you enjoyed it so much you have decided you want to "be your own boss." While you were in the program, your grandfather died and..
A bond that pays interest annually yields a rate of return of 10.00 percent. The inflation rate for the same period is 4 percent. What is the real rate of return on this bond?
Two investors are evaluating Apple's stock for possible purchase. They agree on the expected value of D1, and on the expected future dividend growth rate. Silverado Mining Company's ore reserves are being depleted, so its sales are falling. Also, bec..
The next dividend payment by Wyatt, Inc., will be $2.80 per share. The dividends are anticipated to maintain a growth rate of 7.25 percent, forever. Assume the stock currently sells for $49.20 per share. What is the dividend Yield? What is the expect..
Suppose a firm in planning to invest $ 1,000,000 to invest in a risk free asset and a risky asset A. Assume that µf = 0.05, µA = 0.10 and ?A = 0.17. The company has capital reserves that could cover $ 100, 000 but no more and would like as a result t..
Thomas Brothers is expected to pay a $3.1 per share dividend at the end of the year (that is, D1 = $3.1). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock, rs, is 19%. What is the stock's curr..
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