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Micro Bike Company has short term investment of 50 debt of 1500 and preferred stock of 200. The equity of the micro bike has 100 shares. The company forecasts following:
Based upon the above answer the following:
What is the present value of the free cash flow?
What is the present value of the horizon value?
What is estimated intrinsic value of the equity?
What is the estimated intrinsic stock price?
Asset W has an expected return of 16.0 percent and a beta of 1.45. If the risk-free rate is 3.2 percent, what is the market risk premium?
Davison Toaster Corp. sells its products for $100 per unit. It has the following costs: not enough information has been provided to determine the break-even point.
The risk-free rate of return is currently 0.05, whereas the market risk premium is 0.07. If the beta of RKP, Inc., stock is 1.7, then what is the expected return on RKP?
The firm has estimated the after tax cost of each source of funds. Debt costs .07, preferred stock .11, retained earnings .20 and new common stock .22. The firm is operating under conditions of capital rationing and therefore will not sell new stock ..
Based on knowledge rate these ratios in terms of significance for: almost sick firms striving to fight off bankruptcy.
You own a portfolio that has $3,600 invested in Stock A and $4,600 invested in Stock B. If the expected returns on these stocks are 10 percent and 13 percent, respectively, what is the expected return on the portfolio?
Your company has been approached to bid on a contract to sell 3,900 voice recognition (VR) computer keyboards a year for four years. Due to technological improvements, beyond that time they will be outdated and no sales will be possible. Additionally..
An investment under consideration has a payback of six years and a cost of $434,000. If the required return is 12 percent, what is the worst-case NPV? The best-case NPV? Explain. Assume the cash flows are conventional.
A $1000 bond with semi-annual coupons, with coupon rate of 6% per annum convertible semi-annually, matures at par on October 15th, 2020. The bond is purchased on June 28th, 2005 to yield the investor a nominal rate of 7% per annum convertible semi-an..
Suppose that a firm’s recent earnings per share and dividend per share are $2.90 and $1.90, respectively. Both are expected to grow at 9 percent. However, the firm’s current P/E ratio of 28 seems high for this growth rate. The P/E ratio is expected t..
Consider the following projects, X and Y where the firm can only choose one. Project X costs $600 and has cash flows of $400 in each of the next 2 years. Project Y also costs $600, and generates cash flows of $500 and $275 for the next 2 years, respe..
Titan Football Manufacturing had the following operating results for 2014: sales = $19,830; cost of goods sold = $13,930; depreciation expense = $2,320; interest expense = $320; dividends paid = $600. At the beginning of the year, net fixed assets we..
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