Reference no: EM131224103
SpreadSpreadsheets are especially useful for computing stock value under different assumptions. Consider a firm that is expected to pay the following dividends:
Year 1 2 3 4 5 6
$1.20 $1.20 $1.50 $1.50 $1.75 $1.90 and grow at 5 percent thereafter
A. Using an 11 percent discount rate, what would be the value of this stock?
B. What is the value of the stock using a 10 percent discount rate? A 12 percent discount rate?
C. What would the value be using a 6 percent growth rate after year 6 instead of the 5 percent rate using each of these three discount rates?
D. What do you conclude about stock valuation and its assumptions?
Part 1 of this Assignment to be posted to Turnitin should be a Word document that explains your responses to the 4 subpart questions described above. Sub part D asks for your personal views on stock valuations. It is my expectation that the majority of your explanations be devoted to that subpart of the assignment.
Please use APA formatting and be sure your response is at least one (1) and 1/2 page in length double spaced. Remember focus on your own thoughts and provide citations and references if you use the insights from other sources including the textbook.
Part 2 of this Assignment is to be posted in an Excel document and should lay out clearly your response to subparts a), b) and c) above. Remember I am expecting you to use the formula function of Excel to calculate your answers to each of the subparts of the question. Remember to include your name and other labeling information on the Excel spreadsheet.
|
Company accepts the outside suppliers offer
: Foto Company makes 50,000 units per year of a part it uses in the products it manufactures. Calculate the decrease in company profits if Foto Company accepts the outside suppliers offer.
|
|
The interest portion of each annual payment will
: If McMillan Company borrows money from First State Bank as an installment note, the interest portion of each annual payment will:
|
|
Company should produce in order to maximize its net income
: XYZ Company produces three products, A, B, and C. XYZ's plant capacity is limited to 200,000 machine hours per year. The following information is available for planning purposes: Calculate the number of units of Product C that XYZ Company should prod..
|
|
Determine teh inventory loss suffered as result of the fire
: Regan Manufacturing began operations five years ago. On August 13, 2015, a fire broke out in the warehouse destroying all inventory and many accounting records relating to the inventory. The information availaible is presented below. All sales and pu..
|
|
Computing stock value under different assumptions
: SpreadSpreadsheets are especially useful for computing stock value under different assumptions. Consider a firm that is expected to pay the following dividends: Using an 11 percent discount rate, what would be the value of this stock? What is the val..
|
|
What amount of vacation liability would be reflected
: A company gives each of its 75 employees (assume they were all employed continuously through 2017 and 2018) 12 days of vacation a year if they are employed at the end of the year. What amount of vacation liability would be reflected on the 2017 and 2..
|
|
Retail sales subject to sales tax
: Multiple Choice Question 102 Valley, Inc., is a retail store operating in a state with a 5% retail sales tax. The state law provides that the retail sales tax collected during the month must be remitted to the state during the following month. On Apr..
|
|
Reason for holding long-term investments
: Which of the following listed below is not a reason for holding long-term investments?
|
|
Amortization of premium using the straight-line method
: On the first day of the fiscal year, Nixon Company issues a $923,000, 7%, 10-year bond that pays semi-annual interest of $32,305 ($923,000 x 7% x 1/2), receiving cash of $969,200. Journalize the entry to record the first interest payment and amortiza..
|