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Integrated Potato Chips paid a $1.30 per share dividend yesterday. You expect the dividend to grow steadily at a rate of 4% per year. a. What is the expected dividend in each of the next 3 years? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Expected Dividend Year 1 $ Year 2 Year 3 b. If the discount rate for the stock is 12%, at what price will the stock sell? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Current price $ c. What is the expected stock price 3 years from now? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Future price $ d. If you buy the stock and plan to hold it for 3 years, what payments will you receive? What is the present value of those payments? (Leave no cells blank - be certain to enter "0" wherever required. Do not round intermediate calculations. Round your answers to 2 decimal places.) Year 1 Year 2 Year 3 DIV $ $ $ Selling price Total cash flow PV of cash flow
A firm purchased some equipment at an initial cost of $100,000. The equipment yielded an annual net saving of $10,000 per year during its 10-year life. At the end of 10 years, the equipment was sold for $10,000. Assuming an interest rate of 10%, did ..
Ichinomiya Company has a total value of $54 million. Its debt is in the form of zero-coupon bonds, which will mature in 4 years. The face value of bonds is $15 million. The riskless rate is 3.15% at present. The σ of Ichinomiya is 0.42. Find the debt..
Fairfax Pizza sells pizza in Northern Virginia and is evaluating the stadium project, which would involve selling pizza in the baseball stadium for 2 years, starting today. Based on the following information, what is the net present value of the stad..
Assume XYZ Corp. had a current ratio of 12.5 You are the CFO of XYZ Corp. Would you argue the high current ratio is good or bad? Why? Ratios provide us with the ability to quickly assess a particular item. We can quickly assess short-term liquidity b..
Millbridge Ambulance Service has been considering consolidating their three locations into just 2 locations. The location they are considering closing currently costs $155,000 to operate. The general and administrative expenses of $20,000 are an allo..
A company currently pays a dividend of $3 per share (D0 = $3). It is estimated that the company's dividend will grow at a rate of 17% per year for the next 2 years, then at a constant rate of 6% thereafter. The company's stock has a beta of 1.1, the ..
Eastern Clothing Company is considering manufacturing a new style of shirt, whose data are shown below. The equipment to be used would be depreciated by the straight-line method over its 3-year life and would have a zero salvage value, and no new wor..
A pension fund manager is considering three funds. The first is a stock fund, the second is a long-term government and corporate bond fund, and the third is a T-bill money fund that yields a sure rate of 3%. The probability distributions of the risky..
Aspin Corporation's charter authorizes issuance of 2,000,000 shares of common stock. Currently 1,400,000 shares are outstanding and 100,000 shares are being held as treasury stock. The firm wishes to raise $48,000,000 for a plant expansion. What is t..
Essence of Skunk Fragrances, Ltd., sells 6,500 units of its perfume collection each year at a price per unit of $395. All sales are on credit with terms of 1/30, net 30. The discount is taken by 50 percent of the customers. What is the amount of the ..
You are holding a bond with an annual coupon rate of 3.5% that matures in 11 years. Bonds recently issued of similar risk have a coupon rate of 4%. What should your bond sell for in the secondary market?
A share of stock with a beta of .65 now sells for $46. Investors expect the stock to pay a year-end dividend of $2. The T-bill rate is 6%, and the market risk premium is 9%. a. Suppose investors believe the stock will sell for $48 at year-end. Is the..
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