The relationship between boom and the market

Assignment Help Financial Management
Reference no: EM131297394

1. Beef Co. in one year is expected to trade at $24 per share. And is expected to pay a dividend of 30 cents at the end of the year. If investments with equivalent risk have an expected return of 9%, what is the most you should pay for a Beef Co. stock today? What is the dividend yield and capital gain rate of this investment?

2. Bent CO. at the end of the year will have EPS of $5 and if the firm has a cost of capital of 12%:

A) if the firm decides to pay out all earning as dividends what would todays firm value be?

B) IF the firm decides to pay out 75%, 50%, or 25% of earnings and the firms return on investment is 15% what firm value will the company have?

3. What if initial sales were to be 600 million instead of 518 million and the WACC was 12% (assume the growth and other ratios are the same as before)

A) Find the enterprise value and the current stock price.

4. If BOOM inc. has a Beta of 1.3 and the current riskfree rate is 3.5% and the market return is expected to be 11%

A) What is the expected return of BOOM inc stock?

B) What if over the next year the actual market return ended up being 8% what return would you expect BOOM to have given the relationship between BOOM and the market?

Reference no: EM131297394

Questions Cloud

Differences between interest rate swap and interest rate cap : What are the differences between an interest rate swap and an interest rate cap? What factors determine the premium (price) for an interest rate cap?
Use interest rate swap to create net fixed rate on the debt : Stagecoaches, Inc. has $100,000,000 in 5-year floating rate debt with an interest rate of LIBOR + 3.0% and quarterly payments. Describe how the firm can use an interest rate swap to create a net fixed rate on the debt. Given the current fixed-rate on..
Forward rate agreement to hedge the interest rate risk : IP Phone, Inc. plans to borrow $80,000,000 for 6 months, three months from now. (In other words, the firm will be getting a 6-month loan in December.) The interest rate on the loan will be LIBOR + 0.75%, but the company is concerned about potential c..
Trading book includes an equity portfolio with market value : A bank's trading book includes an equity portfolio with a market value of $58,000,000. The volatility (standard deviation) of the daily returns is 2.43%. What is the 1-Day 5% Value at Risk for the portfolio?
The relationship between boom and the market : If BOOM inc. has a Beta of 1.3 and the current riskfree rate is 3.5% and the market return is expected to be 11% What is the expected return of BOOM inc stock? What if over the next year the actual market return ended up being 8% what return would yo..
How much would it have to pay at the maturity date : Assume an organization could issue a zero coupon bond at an annual interest rate of 4 percent with semi-annual compounding for 20 years. If it receives $2,264.45 for the bond, how much would it have to pay at the maturity date?
Compute the accounts payable period based : Compute the Accounts Payable (A/P) period based on the following information: Average A/P balance = $66,073. Annual Cost of Goods Sold = $245,406.
Compute the cash cycle based : Compute the cash cycle based on the following information
Which one of the three homes would eric be able to afford : Eric decided that now that home prices are finally falling it’s time to buy his first home. A so-so house in Pomona costs about $500,000. A decent house in Fullerton costs about $700,000. If the annual mortgage rate on a 20-year loan is 6% (compounde..

Reviews

Write a Review

 

Financial Management Questions & Answers

  Lead to an increase in organizational effectiveness

Describe the relevance of communication in the organizational process. Suggest three ways that the managers can improve communications that will lead to an increase in organizational effectiveness.

  What is the minimum cash flow-project acceptable

What is the minimum cash flow that can be received at the end of the last two years (year 9 and 10) to make the following project "acceptable?" Initial Cost= $100,000; Cash Flows at the end of years one through four= $10,000; Cash Flows at the end of..

  The firms overall cost of capital was used a hurdle rate

An all-equity firm is considering the following projects: Which projects have a higher expected return than the firm's 11% cost of capital? Which projects should be accepted? Which projects would be incorrectly accepted or rejected if the firm's over..

  What is the value of this twenty five year lease

What is the value of this 25 year lease? The first payment, due one year from today is $2,000 and each annual payment will increase by 5%. The discount rate used to evaluate similar leases is 7.5%.

  Explain with examples how the cost of capital is determined

The Genesis Energy operations management team was excited to understand the various options for securing financing to fund the rapid growth plans. Explain with examples how the cost of capital is determined. Calculate the differences in cost and risk..

  What is the current price of the stock

Upper Crust Bakers just paid an annual dividend of $2.80 a share on its common stock and is expected to increase that dividend by 4 percent per year for the foreseeable future. If the discount rate on Upper Crust is 11.50 percent, what is the current..

  Employees taxable income

One of your corporate clients has approached you about whether or not its employees are required to include certain benefits provided by the corporation in their income. In particular, the corporation has inquired whether the following benefits provi..

  What is the holding period return for your portfolio

Last year you purchased 650 shares of stock for $20.5 per share and 4 coupon bonds with 6% coupon rate for $1,000 each. Over the course of the year, you received dividends totaling $1.2 per share. Today stock is selling at $21.5 per share and bond is..

  Interest rate-perpetual stream

Given an interest rate of 7.05 percent per year, what is the value at Year 11 of a perpetual stream of $3,800 payments that begin at Year 18?

  Blades plc is a uk-based company that has been incorporated

blades plc is a u.k.-based company that has been incorporated in the united kingdom for three years. blades are a

  The expected return on the market portfolio

Assume that the CAPM holds. Assume also that the expected return on the market portfolio is 10%. If a stock with a beta of 2 has an expected return of 15% in this economy, what is the expected return on a stock with a beta of 0.5?

  About the before-tax analysis

Fairmont Industries primarily relies on 100% equity financing to fund projects. A good opportunity is available that will require $250,000 in capital. The Fairmont owner can supply the money from personal investments that currently earn an average of..

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