User Account

All Pages

Castles in the sand generates a rate of return

Assignment Help Managerial Accounting
Reference no: EM13940317

Castles in the Sand generates a rate of return of 20% on its investments and maintains a plow back ratio of .30. Its earnings this year will be $4 per share. Investors expect a 12% rate of return on the stock.

a. Find the price and P/E ratio of the firm.

b. What happens to the P/E ratio if the plow back ratio is reduced to .20?

c. Show that if plow back equals zero, the earnings-price ratio, E/P, falls to the expected rate of return on the stock.

Rate of return.......... 20.00%
Plow back ratio... ..... 0.30 
Earnings this year ......$4.00
Expected rate of return....12.00%
Plow back ratio (b) ...... 0.20
Plow back ratio (c) ......0.00 

Reference no: EM13940317

Questions Cloud

Maintains a constant growth rate in dividends : Secolo Corporation stock currently sells for $81 per share. The market requires a return of 11.1 percent on the firm’s stock. If the company maintains a constant 3 percent growth rate in dividends, what was the most recent dividend per share paid on ..
Structure a risk management plan : You are required to select an event as a case study to structure a risk management plan of approximately 3,500 words. The selected event should provide enough complexity to allow the the possibility to develop an appropriate risk management plan.
The structure of probation effectively reintegrates : 1.Take a position on whether or not the structure of probation effectively reintegrates the offender back into society while avoiding the stigma of incarceration. Provide a rationale for your response.
What are the firm major strengths and weaknesses : Use the extended DuPont equation to provide a summary and overview of company's financial condition projected for 2014. What are the firm's major strengths and weaknesses
Castles in the sand generates a rate of return : What happens to the P/E ratio if the plow back ratio is reduced to .20? Show that if plow back equals zero, the earnings-price ratio, E/P, falls to the expected rate of return on the stock.
Description of the organizations key knowledge areas : Description of the organization's key knowledge areas - description of the organization's use of IT-based tools for managing knowledge
Design the logic and write the rest of the program : Design the logic and write the rest of the program using a nested statement.  They are using JOptionPane.showInputDialog.
Dividends are expected to grow at a rate : Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 20 percent for the next three years, with the growth rate falling off to a constant 4 percent thereafter. If the required return is 10 percent, and the company just paid a di..
Cognitive moral development and locus of control : Evaluate yourself in terms of cognitive moral development and locus of control, eithical decision-making style, Moral disengagement, and Machiavellianism what does this tell you about your own ethical decision making?

Reviews

Write a Review

Managerial Accounting Questions & Answers

  How much money was involved in fraud

What was the brief history of companies and what kind of Unethical activities these companies were doing and how much money was involved in fraud?

  Should we expect its variable and fixed costs for this model

Should we expect its variable and fixed costs for this model to stay within the relevant range? Explain.

  Knowledge-activity based costing

City of Joseph Commercial Bank hired consultants to compute the costs of three products: checking accounts, personal loans, and the Gold visa card. The consultant identified the following activities, costs and activity drivers (annual data):

  Preview of financial accountant-forecasting

Generally forecasting and planning is considered the preview of the financial accountant or the forecasting and planning department.

  Demonstrated social and environmental accountability

Discuss the stance and initiatives of the Australian accounting profession on corporate social responsibility (CSR) and sustainability and demonstrated social and environmental accountability

  Prepare the companys production budget for third quarter

Prepare the companys production budget for the third quarter of this year (the months of July, August and September) in good form. Include a column for each month and a total column for the entire quarter.

  Minimum amount of revenue

Estilo Company has 3 operating segments with following information: What is the minimum amount of revenue that each of these segments must generate to be considered separately reportable?

  Simid sports-production budget

Near end of 2011, the management of Simid Sports Co., merchandising company, prepared the following estimated balance sheet for December 31, 2011: Simid Sports' single product is bought for $30 per unit and resold for $60 per unit.

  What are the ethical consideration

Who are the stakeholders in this situation, what are the ethical consideration and how will you complete this assignment and why?

  Prepare the journal entry to record tamasine company

Prepare the journal entry to record Tamasine Company's issuance of 5,000 shares of $100 par value 7% cumulative preferred stock for $ 102 cash per share.

  Use of job order and process cost system

Discuss the factors that a company must consider when deciding whether to use a job order or a process cost system. What might be the consequences to a company if they make the wrong choice?

  Prepare a statement of cash flows for the year ended

1.The following financial statements and additional information are reported.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd