What is estimate of ironores price and earnings ratio

Assignment Help Financial Management

Reference no: EM13911544

Ironore Limited is an iron mining company whose mines are slowly being depleted (i.e., little by little, the amount of iron ore available in the mine is declining as the ore is extracted each year). Therefore, investors expect Ironore’s Net Income to decline each year by 2%. Ironore’s most recent Net Income = $2 million, and there are 500,000 shares of Ironore common stock outstanding. Ironore pays out all of its Net Income as dividends to its shareowners. What is your estimate of Ironore’s Price/Earnings ratio (i.e., ratio of stock price to earnings per share)? Assume investors require a minimum rate of return = 10% on an investment in Ironore stock.

Reference no: EM13911544

Questions Cloud

The balance of the estimated warranty liability account : The balance of the Estimated Warranty Liability account was $12,500 on January 1, 2013, and $17,200 on December 31, 2013.

Calculate the projects NPV-IRR-MIRR and Payback : Old Dominion is considering adding a new type of wind tamer to its trailers, which will save the company in fuel costs each year and the required rate of return is 8%. Calculate the project's NPV, IRR, MIRR and Payback

Future value of multiple annuities : Assume that you contribute $290 per month to a retirement plan for 20 years. Then you are able to increase the contribution to $580 per month for another 30 years. Given a 7 percent interest rate, what is the value of your retirement plan after the 5..

The bonds pay interest on an annual basis on june : On July 1, 2013, $6 million face amount of 7%, 10 year bonds were issued.

What is estimate of ironores price and earnings ratio : Ironore Limited is an iron mining company whose mines are slowly being depleted (i.e., little by little, the amount of iron ore available in the mine is declining as the ore is extracted each year). What is your estimate of Ironore’s Price/Earnings r..

What is your estimate of stock price today : The Yubaba Company has so far not paid a dividend on its stock. Investors believe that the Company won’t pay a dividend next year, but that it will pay dividends starting two years from now. The dividend then is expected to be $0.20 per share. What i..

Investors expect the dividend to grow : Zeniba Inc.’s stock is currently selling for $23.56 per share. The company just paid a dividend = $2.00 per share (i.e., D0 = $2.00), and investors expect the dividend to grow at a constant rate out into the future. Investors require a minimum annual..

What is your incremental cash flow from selling the machine : You purchased a machine for $1.06 million three years ago and have been applying straight-line depreciation to zero for a seven-year life. Your tax rate is 35%. If you sell the machine today (after three years of depreciation) for $779,000, what is y..

What is cost of equity if you ignore taxes : Alpha company has a debt-equity ratio of .6, a pretax cost of debt of 7.5%, and an unlevered cost of equity of 12%. What is Alpha's cost of equity if you ignore taxes?

User Account

All Pages