Chiptech, Inc., is an established computer chip firm with several profitable existing products as well as some promising new products in development. The company earned $2.8 a share last year, and just paid out a dividend of $1.40 per share. Investors believe the company plans to maintain its dividend payout ratio at 50%. ROE equals 24%. Everyone in the market expects this situation to persist indefinitely.

a. What is the market price of Chiptech stock? The required return for the computer chip industry is 20%, and the company has just gone ex-dividend (i.e., the next dividend will be paid a year from now, at t = 1).(Round your answer to 2 decimal places. Omit the "$" sign in your response.)

Market price of Chiptech stock $

b. Suppose you discover that Chiptech’s competitor has developed a new chip that will eliminate Chiptech’s current technological advantage in this market. This new product, which will be ready to come to the market in 2 years, will force Chiptech to reduce the prices of its chips to remain competitive. This will decrease ROE to 20%, and, because of falling demand for its product, Chiptech will decrease the plowback ratio to 0.4. The plowback ratio will be decreased at the end of the second year, at t = 2: The annual year-end dividend for the second year (paid at t = 2) will be 60% of that year’s earnings. What is your estimate of Chiptech’s intrinsic value per share? ( Hint: Carefully prepare a table of Chiptech’s earnings and dividends for each of the next 3 years. Pay close attention to the change in the payout ratio in t = 2.) (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

At time 2 $

At time 0 $

What is the intrinsic value of a share of xyrong stock : What is the intrinsic value of a share of Xyrong stock? what is your expected 1-year holding-period return on Xyrong stock? |

What is the expected return on the portfolio : Your portfolio is diversified. It has an expected return of 10.0% and a beta of .95. You want to add 500 shares of Company D's at $40 a share to your portfolio. |

Current market price of stock reflects its intrinsic value : Assuming the current market price of the stock reflects its intrinsic value as computed using the constant-growth DDM, |

Implied value of the roe on future investment opportunities : If the expected earnings per share are $8.00, what is the implied value of the ROE on future investment opportunities? |

What is your estimate of chiptech intrinsic value per share : What is the market price of Chiptech stock? What is your estimate of Chiptech’s intrinsic value per share. |

Analyze the major professional roles that physicians play : Analyze the major professional roles that physicians and nurses play, as they apply to following the requirement for obtaining patient consent |

Develop working or friendly relationships with members : Is there a possibility of corruption when officers develop working or friendly relationships with members of the public as part of a community policing strategy |

Describe a progression of changes in corrections from : Describe a progression of changes in corrections from The Reformatory Movement (1870s to 1890s) to the Crime Control Model |

Discuss four general types of control strategies : Chose two of the four types of control strategies and discuss how they work and how effective they are |

## What is the value of a put option with a strike priceAn investor bought 400 shares of stock when its price was $40/share. The price of the stock is now up to $75/share and the investor decides to hedge his position by purchasing 4 puts (premium = $7.50, exercise price of 75). What is the value of a put.. |

## Unlimited liability for the obligations of their businessThe liability of those who own a corporation is limited to their investment, while proprietors and general partners have unlimited liability for the obligations of their business. Explain what relevance this has for risk management. |

## Estimate of remaining cash flows will be revisedACME has hired you to study the feasibility of a new toy that requires a $5 million initial investment. ACME expects annual cash flows of $880,000 for the next 10 years. The discount rate is 10%. a. What is the NPV of the new toy? b. After one year, .. |

## For possible inclusion in your investment portfolioYou are considering three stocks — ?A, B, and C — for possible inclusion in your investment portfolio. Stock A has a beta of 0.80?, stock B has a beta of 1.1?, and stock C has a beta of −0.4. If you anticipated a major stock market? rally, which stoc.. |

## Bond valuation example problemSuppose that Diversified Technology has a B-rated bond with exactly 30 years until maturity, a face value of $1000 and a semiannual coupon rate of 6%. The yield to maturity on B-rated bonds today is 10 percent. What is the price of this bond today? |

## If debt financing is usedIf debt financing is used, The percentage change in net operating income is greater than a given percentage change in net income. The percentage change in net operating income is equal to a given percentage change in net income. The percentage change.. |

## Retirement in order to meet your retirement goalYou believe that you will have the kind of lifestyle in 40 years when you plan on retiring that will require $200,000 a year for about 20 years. If the current rate of return on your retirement portfolio is 12% per year with inflation running about 3.. |

## Well-established supplier of fine percussion instrumentsKelsey Drums, Inc., is a well-established supplier of fine percussion instruments to orchestras all over the United States. The company's class A common stock has paid a dividend of $11 per share per year for the last 17 years. How much total capital.. |

## Calculate the conversion value of the bondsCalculate the conversion value of the bonds if Findlay's common stock is selling for $45 per share.- Calculate the straight-bond value, assuming that straight debt of equivalent risk and maturity is yielding 12 percent. |

## Indexed funds can produce higher returns than managed fundsStudies have shown that indexed funds can produce higher returns than managed funds; this is evidence in support of: |

## The property is derelict and must be destroyed at a costA building is available for sale for $5 million. The property is derelict and must be destroyed at a cost of $ 3 million. The State of Florida wants the property to building an inner city detention center and has an allocated budget for the land of $.. |

## What tax rate would investor be indifferent in two bondsAn investor recently purchased a corporate bond which yields 10.5%. The investor is in the 34% combined federal and state tax bracket. What is the bond's after-tax yield? Corporate bonds issued by Johnson Corporation currently yield 11.5%. Municipal .. |

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