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Eberhart Manufacturing has projected sales of $146.2 million next year. Costs are expected to be $81.6 million and net investment is expected to be $15.6 million. Each of these values is expected to grow at 16 percent the following year, with the growth rate declining by 2 percent per year until the growth rate reaches 8 percent, where it is expected to remain indefinitely. There are 6.1 million shares of stock outstanding and investors require a return of 15 percent return on the company’s stock. The corporate tax rate is 38 percent. (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16)) '
a. What is your estimate of the current stock price?
b. Suppose instead that you estimate the terminal value of the company using a PE multiple. The industry PE multiple is 10. What is your new estimate of the company’s stock price? Share price $
Find the present value of the following ordinary annuities: PV of $300 each six months for five years at a simple rate of 12 percent, compounded semi annually
Determine the amount of joint cost allocated to each product if the physical-measure method is used. (10points)
As of 2015, per capita spending on health care in the United States was about $9000. If this amount increased by 5 percent a year, what would be the amount per capita spending for health care in 12 years?
Suppose you buy stock at a price of $83 per share. Three months later, you sell it for $89. You also received a dividend of $.38 per share. What is your annualized return on this investment?
Ballack Co.’s common stock currently sells for $49.00 per share. The growth rate is a constant 11.2%, and the company has an expected dividend yield of 6%. The expected long-run dividend payout ratio is 20%, and the expected return on equity (ROE) is..
A firm has a project that costs $600 today and pays off next period $900 with probability .5 and $360 with probability .5. Assume that all investors are risk-neutral, the risk-free interest rate is 0, and there are no direct bankruptcy costs.
You are tasked to sell a high priced item on Ebay. This could be a car, house, etc. First, describe what you are selling. Second, based on what we learned so far, how would you sell it? What areas of the selling process are important? Who are the buy..
How would you go about determine the optimal number of currencies in the world? In a region like Europe? Within a country like the United States? Describe your approach to the issue, and use your analytical framework to compare the appropriateness of..
Find the price of the following Bond X The interest rate on the bond is 8%, paid semi-annually and the market yield is 9%. The maturity is 10 years
Consider a 20 year, $1000 bond with a coupon rate of 9% and quarterly coupons. By looking at Bloomberg you can see that this bond has most recently traded at a price of $1462.62. Give two numbers (a,b) such that the yield to maturity of bond is betwe..
Discuss the pros and cons of beginning to save for retirement at the age of 25 compared to 35. You can use calculations to help facilitate your discussion if it helps you.
The Zephyr Corporation is contemplating a new investment to be financed 33 percent from debt. The firm cloud sell new $1,000 par value bonds at a net price of $945. The coupon interest rate is 12 percent, and the bonds would mature in 15 years. If th..
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