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The risk-free rate of return is 8%, the expected rate of return on the market portfolio is 15%, and the stock of Xyrong Corporation has a beta coefficient of 1.2. Xyrong pays out 40% of its earnings in dividends, and the latest earnings announced were $10 per share. Dividends were just paid and are expected to be paid annually. You expect that Xyrong will earn an ROE of 18% per year on all reinvested earnings forever.
A) What is the intrinsic value of a share of Xyrong stock?
B) If the market price of a share is currently $103, and you expect the market price to be equal to the intrinsic value one year from now, what is your expected one-year holding-period return on Xyrong stock?
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You’ve borrowed $20,000 on margin to buy shares in Disney, which is now selling at $50 per share. Your account starts at the initial margin requirement of 50%. The maintenance margin is 35%. Two days later, the stock price falls to $48 per share. a. ..
Maintenance costs for a regenerative thermal oxidizer have haven increasingly uniformly for 5 years. The cost in year 1 was $8,000 and it increased by $900 per year through year 5. Compute the present worth of the costs using an interest rate of 10% ..
Assume the exchange rate between US dollar and Indian Rupee is 60 Rupees = $1, and exchange rate between dollar and British pound is 1 Pound = $1.50. What is the exchange rate between the Rupee and pound?
A project will generate $1 million net cash flow annually in perpetuity. If the project costs $7 million, what is the lowest WACC shown below that will make the NPV negative? A-10% B-12% C-14% D-16%
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