Calculate the value of a share of amazon stock

Assignment Help Finance Basics
Reference no: EM13258632

Steve has gathered information on the Web about Amazon's (AMZN) history of sales and profit margins. Based on this information, he believes that Amazon will have sales of $45 billion in 2013, with a profit margin of 3.0%. He also notes that Amazon has 454 million shares outstanding, and he expects the P/E ratio to remain at its current value of 85. Help Steve calculate the following. Hints: You will need equations 8.1, 8.2, and 8.5. "Net profit" and "After-Tax Earnings" are the same thing.

a. If Amazon hits the sales and profit margin targets given, what will its net profit be in 2013? Do not round this answer.

b. Given this net profit and the number of shares outstanding, find the expected earnings per share (EPS) for 2013. You may round to the nearest cent if you wish.

c. Given this EPS estimate and Steve's assumption about the P/E ratio, calculate the value of a share of Amazon stock.

 

Reference no: EM13258632

Questions Cloud

Amount of operating expenses incurred by abc company : Calculate the amount of operating expenses incurred by ABC Company during May. Do not use decimals in your answer.
Find the percentage of full load the transformer is carrying : A 35 kVA transformer supplies a load of 12 kW at a power factor of 0.45 lagging. Find the percentage of full load the transformer is carrying. If additional unity power factor loads are to be served with the same transformer,
Calculate the voltage of the battery : When a battery is connected to the plates of a 2.00-µF capacitor, it stores a charge of 30.0 µC. What is the voltage of the battery
Explain what is the half-life of the reaction : After 79.0 min, 35.0% of a compound has decomposed. What is the half-life of this reaction assuming first-order kinetics
Calculate the value of a share of amazon stock : If Amazon hits the sales and profit margin targets given, what will its net profit be in 2013? Do not round this answer.
Value of the ending inventory for a perpetual inventory : Using the information outlined above, what is the value of the ending inventory for a perpetual inventory system using the FIFO inventory valuation?
Explain the role of ethics and integrity : Explain the role of ethics and integrity in the criminal justice profession, and the higher standard expected of criminal justice professionals. Write clearly and concisely about ethics and leadership in criminal justice using proper writing mech..
How many bookcases should be produced each week : Each coffeetable produced by Robert West Designers nets the firm a profit of$15. How many bookcases should be produced each week?
Compute the heating requirement for the process in kw : The liquid contains 42.5 mole% benzene and the vapor contains 73.5 mole% benzene. -Calculate the heating requirement for this process in kW. -Using Raoult's law determine whether or not the given benzene analyses are consistent with each other

Reviews

Write a Review

Finance Basics Questions & Answers

  Information about dividend policy

Alcoa recently announced a new dividend policy. The firm said it would pay a base cash dividend of 40 cents per common share each quarter. For what types of firms would Alcoa's new dividend policy be appropriate? Explain.

  Necessary financing to support the anticipated future growth

A company needs about $20-25 million dollars to expand. The following is included for data. It is privately owned and sells proprietary products in the medical field.

  Use of derivative securities

Can you please describe how the use of derivative securities can further enhance a portfolio's performance.

  Which ratio measures liquidity

What is the value of ratio for FY 2011 and does the ratio you calculated in part (b) compare favorably or unfavorably to the rule of thumb for this ratio?  Write "none" if there is no rule of thumb.

  Calculate expected return using capm

Estimate of beta for British Petroleum. Please consider examining or using an industry average beta, especially if the reported beta you find seems unrealistic or inappropriate.

  Computation of price of the bond

Computation of price of the bond and what price should the existing bond be traded at when the new five-year bond issued

  Describe what is the value of the firm

Find what will the value be if Corrado converts to 50% debt and evaluate what will the value be if Corrado converts to 100% debt?

  Find the optimal time to abandon the investment

An asset costs $100,000 and will create cash benefits of $30,000 at the end of each year for five years for Hartford company. Salvage value are $50,000, $40,000, and $0 at the end of year 3, year 4, and year 5 respectively.

  Sources of long-term international financing

What are some sources of short-term, medium-term, and long-term international financing? What are the costs associated with each of these sources?

  Create a bond amortization table

June 1, 2004 Janson Corporation sold $1,000,000 in long term bonds for $877,600 maturing in ten years with a stated interest rate of 8 percent and yield rate of 10 percent.

  Calculate the net cash provided by operating activities

King Company makes a short-term investment in 300 shares of Renfro Corporation's common stock. The stock is purchased for $30 a share plus brokerage fees of $400.

  Calculate the market price of warrants

Sloane Company offered detachable five year warrants to buy one share of common stock par value five dollar at $20 at a time when the stock was selling for 32 dollar.

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