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Assume that the average firm in your company's industry is expected to grow at a constant rate of 5% and that its dividend yield is 6%. Your company is about as risky as the average firm in the industry and just paid a dividend (D0) of $2.5. You expect that the growth rate of dividends will be 50% during the first year(g0,1 = 50%) and 20% during the second year (g1,2 = 20%). After Year 2, dividend growth will be constant at 5%. What is the required rate of return on your company's stock? Round your answer to two decimal places.
What is the estimated value per share of your firm's stock? Round your answer to the nearest cent. Do not round your intermediate computations.
What will the holder receive when the bond matures? If the current rate of interest on a comparable debt is 8 percent, what should be the price of this bond? Would you expect the firm to call this bond Why?
A company has $7.50 per unit in variable cost at $4.70 per unit in fixed cost at a volume of 50,000 units. If the company marks up the cost by 0.52 what price should be charged if 61,000 units are expected to be sold?
A factory forecasts to produce the following cash flows: Year 1 - $6516, Year 2 - $7000, Year 3 - $11400, Year 4 onward in perpetuity - $12000. If the cost of capital is 6%, what is the factory's present value?
The market value of the equity of Thompson, Inc., is $307,000. The balance sheet shows $22,000 in cash and $200,000 in debt, while the income statement has EBIT of $97,000, and a total of $136,000 depreciation and amortization. What is the enterprise..
Drugal Brewing Co. has a quick ratio of 2.00x, $30,825 in cash, $17,125 in accounts receivable, some inventory, total current assets of $68,500, and total current liabilities of $23,975. The company reported annual sales of $100,000 in the most recen..
Image your small business that produces very small remote control aircraft capable of long sustained flights. You are ready to expand your business by competing for Department of Defense (DoD) contracts.
A trader creates a bear spread by selling a 6-month put option with a $25 strike price for $2.15 and buying a 6-month put option with a $29 strike price for $4.75. What is the initial investment? What is the total payoff (excluding the initial invest..
The notion that a company can be both global and local represents:
According to the expectations theory, if the one observed interest rate today is 4%, the two year forward one year from now is 7%, and the three year forward rate two years from now is 10 %, -- what is the observed five rate today.to be right answer ..
Maack Corporation's contribution margin ratio is 19% and its fixed monthly expenses are $51,500. If the company's sales for a month are $314,000, what is the best estimate of the company's net operating income? Assume that the fixed monthly expenses ..
Central bank directly controls both inside and outside money. Outside money is that part of the money supply produced by the private banking system. Inside money refers to the quantity of notes and coin in the economy.
(Net present value calculation) Big Steve’s, makers of swizzle sticks, is considering the purchase of a new plastic stamping machine. This investment requires an initial outlay of $100,000 and will generate net cash inflows of $18,000 per year for 10..
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