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Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years, because the firm needs to plow back its earnings to fuel growth. The company will pay a dividend of $15 per share in 10 years and will increase the dividend by 5 percent per year thereafter. If the required return on this stock is 15 percent, what is the current share price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Current share price $
Suppose your firm has decided to use a divisional WACC approach to analyze projects. The firm currently has four divisions, A through D, with average betas for each division of 0.8, 1.0, 1.5, and 1.7, respectively. the current cost of equity (based o..
White machine shop fabricates polished steel casings. They currently sell 20,000 casings at a selling price of $45. They have the following cost structure: Variable costs per unit $30 Fixed costs $150,000 Required (each requirement is independent): W..
In a year, a business makes some profit and does not pay dividend. which of the following will reduce the retained earnings. use the retained earnings to buy a machine. use the retained earnings to buy back some of its own shares and retire the share..
A wealthy philanthropist has established the follo... Save A wealthy philanthropist has established the following endowment for a hospital. The details are as follows: a cash deposit of $ 10 M one year from now; an annual cash deposit of $5M per year..
A firm has a return on equity of 16 percent, a return on assets of 11 percent, and a 30 percent dividend payout ratio. What is the sustainable growth rate?
Revise your pro forma financial statements for 1996 and 1997 on the basis of the following assumptions: a. Short-term loans will be repaid when sufficient cash is available to do so without reducing the liquidity of the firm below the minimum require..
You construct a price-weighted index of 78 stocks. At the beginning of the day the index is 9,364.36. During the day, 77 stock prices remain the same, and one stock price increases $4.30. At the end of the day, your index value is 9,417.95. What is t..
Tiff’s Treats is considering the purchase of a new cookie dough-making machine. The new machine should reduce their operating expenses by $20,000 each year for 10 years. What purchase price makes the NPV of the project zero if you estimate that the ..
What are the differences between a straight bond, a floating-rate note, and a convertible bond?
The challenge of global promotion is not simply to communicate across culturally diverse country markets, but to also achieve integrated marketing messages among the different media forms used to reach targeted customers.
Which of the following statements is true? The capital gains yield represents the total return earned by an investor. An increase in an unrealized capital gain will increase the capital gains yield. The dividend yield can be described as the increase..
Use the following returns for X and Y. Returns Year X Y 1 21.1 % 24.3 % 2 – 16.1 – 3.1 3 9.1 26.3 4 18.2 – 13.2 5 4.1 30.3 Requirement 1: Calculate the average returns for X and Y.
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