17. Zain Company is providing technical support to PDO for the last 15 years. Now the company has decided to share its profit with shareholders. But before that the company is interested to find Price Earnings Ratio. The market price is RO 15 and the earnings per share which is RO 5. So, the price earnings ratio will be ________. a. None of the options b. 3 c. 4 d. 2
Q: Ridzuan is a finance student at a college. Recently, he has won RM 15,000 from a competition. He nee...
A: Data given: Amount invested= RM 15,000 Investment Option:: Option A: Invest in a fund that pays 8% s...
Q: Esfandairi Enterprises is considering a new three-year expansion project that requires an initial fi...
A: Let's first establish the year 0's cash flow. In year 0, we only have investments for the project, S...
Q: Calculate the durations and volatilities of securities A, B, and C. Their cash flows are shown below...
A: Investors have different options to make investments, and the motive behind investments is to genera...
Q: The following selected account balances were taken from the balance sheet of Q Corp. as of December ...
A: To find the amount available to preferred claims and unsecured creditors, we will work through each ...
Q: Consider two mutually exclusive projects – Project X and Project Y with identical initial outlays of...
A: Capital budgeting means taking decisions related to investments. Capital investments involve the pro...
Q: Halcyon Lines is considering the purchase of a new bulk carrier for $6.6 million. The forecasted rev...
A: Present value is the current value of investment under which the company is analysing the market, ev...
Q: Lambda Banking Group issued preferred shares eight years ago with a stated value of $95 and a divide...
A: in this we have dividend and find out price of preferred stock.
Q: Why we need tocalculate valuation of securities and yield to maturity of a security?
A: One of the important decisions that should be taken by the investor is to the valuation of security,...
Q: 12. In an efficient market, the cost of equity for a risky firm does which one of the following acco...
A: An efficient market is the type of market in which all the information related to the financial inst...
Q: Use the following information to answer questions 4 and 5 Lavish Loans Pty Ltd Industry Average 1.5:...
A: Gearing ratios are kind of financial ratios that measure the performance of a business entity based ...
Q: Direction. Read and understand the given situation. Solve the problem using the given methods of eva...
A: Cost of Machine is P500,0000 Equipment can wash on the average of 12 cars per hour Operating Time is...
Q: Compare and contrast the "trade-off theory' and the "packing order theory" of capital structure
A: EXPLAINATION:- TRADE OF THEORY OF CAPITAL STRUCTURE The trade-off theory of capital structure propos...
Q: Question: A project pays $2000 today, costs $5000 a year from now, and pays $12, 500 in two years. W...
A: Here, Cash inflow in year 0 is $2,000 Cash Outflow in Year 1 is $5,000 Cash Inflow in Year 2 is $12,...
Q: The following table shows the nominal returns on Brazilian stocks and the rate of inflation. Y...
A: Given: Year Nominal Return (%) Inflation (%) 2012 0.3 6.3 2013 -16.0 6.4 2014 -14.0 6.9 2...
Q: g. A stock with a low standard deviation always contributes less to portfolio risk than a stock with...
A: Stock market is divided in two different markets for the purpose of gaining returns: Primary market ...
Q: PV OF A CASH FLOW STREAM A rookie quarterback is negotiating his first NFL contract. His opportunity...
A: Financial contracts are the arranged agreements and deals that consider the buying and selling of an...
Q: For each of the following situations involving annuities, solve for the unknown. Assume that interes...
A: Annuity refers to the amount paid or received on a regular interval. Ordinary annuities are one with...
Q: The Modified Internal Rate of Return (MIRR) is based on : Reinvestment rate, financing rate, and the...
A: MIRR is based upon the financing cost , reinvesting rate of cash flows from a project over a period ...
Q: The following table shows the prices of a sample of Narnian Treasury strips in December 2018. Each s...
A: First of all, we will find the prices from the percentages, 2020 = 0.90703 * 1,000 = 907.03 2021 = 0...
Q: 10-1 Return on investment usually consists of which two components? Select one: a. dividends and...
A: Explanation- Return on investment (ROI) or return on costs (ROC) is a period by comparing net income...
Q: 4. Which of the following statements clearly conflicts with the recommended procedures for complianc...
A: The CFA institute standards of practice handbooks provide the code of conduct related to the investm...
Q: A balanced board of directors is the necessity of an organization’s success to achieve its vision an...
A: Board of directors are the authorities working at top level of management that direct the other leve...
Q: 10-8 The distribution commonly used to describe expected returns and standard deviations in the sto...
A: An investor uses probability distributions to get the possible outcomes of stock price or stock retu...
Q: A piece of newly purchased industrial equipment costs $1.475 million and is classified as seven-year...
A: Information Provided: Industrial Equipment costs = $1.475 million
Q: You have purchased an investment that promises to pay you a constant $300 every six months, indefini...
A: Given: Annuity of $300 every six months Rate of interest = 6% compounded semi-annually.
Q: Which of the following are assumptions of the sustainable (self-supporting) growth model? Check all ...
A: The capital structure of a corporation is the representation of the sources of capital of the corpor...
Q: Glenn purchased a laptop through the credit cooperative of their company. The cooperative provides a...
A: When you purchase some product on credit then monthly payment installment starts either from same mo...
Q: Permian Partners (PP) produces from aging oil fields in west Texas. Production is 1.83 million barre...
A: Present value of all the cash flows is calculated and then divided by the number of shares outstandi...
Q: How the insurance industry in India has been regulated since its inception? Give special emphasis on...
A: The insurance sector or insurance industry refers to the groups of risk management companies that pr...
Q: ***Internal rate of Return Question*** If you want to install water system in your house to collect ...
A: To find the IRR, we will first establish cash flows. We will label cashflow as C0 for year 0, C1 for...
Q: You purchased a bond for 1,100. The bond has a coupon rate of 9 percent, which is paid semiannually....
A: Given: Current price = 1,100 Coupon rate = 9% Years = 17 Par value = 1,000
Q: Suppose a $30m PE partnership is organized to make a single $25m investment, which provides proceeds...
A: Investment = 25,000,000 Time Period (N) = 6 years Proceeds on maturity (Future Value) = 63,200,000 ...
Q: İlhan got a loan of 10.000 TL with a maturity of 10 years with an annual effective interest of 9%. A...
A: Given, Loan = 10,000 TL Maturity = 10 years Annual effective interest = 9% Deposit effective interes...
Q: Kerfuffle Corporation is considering the purchase of a new computer system. The cost for the new sys...
A: Given:
Q: Project Phoenix costs $1.25 million and yields annual cost savings of $300,000 for seven years. The ...
A: Payback period: This method is used to calculate how many years a project will take to recover its i...
Q: 1. GeoTech Company will be holding an IPO of two million shares tomorrow. Market expectations ...
A: Here, Dividend in Year 1 is $1 Super Normal Growth from year 2-4 is 25% Normal Growth Rate from Year...
Q: Can you please me with this ? Thank you so much.
A: The investment decision for mutually exclusive projects can be done with the use of the net present ...
Q: What are the three (3) components that the return from shares can be broken down into?
A: The capital of a corporation consists of units of shares that are used by the corporation to acquire...
Q: What deposit made at the beginning of each month will accumulate to $120,000 at 8% compounded semi-a...
A: An annuity is a financial term that shows a sequence of periodic cash flows with a fixed amount over...
Q: 13-4 An issue of common stock offered to existing shareholders is called a Select one: a. profit...
A: profit sharing dividend is a type of dividend which is distributed to shareholder
Q: If you want to have 14,000 at the end of year 5, how much should you have to save each year if the i...
A: given, FV = 14000 n = 5 r= 3%
Q: The following information is given for a 60-month loan from a bank: Debt repayments are made at the ...
A: Given information: Term of loan : 60 months First installment : 300 TL Interest rate : 12.682503% In...
Q: Do all 3 parts Its 1 July 2020. Greg is planning to purchase a corporate bond with a coupon rate...
A: Given Information : Coupon rate of j2 = 1.68% p.a. Face value = 1000 Yield rate = j2 = 6.15% p.a
Q: Indicate whether the following statements are true or false. a. Investors demand higher expected r...
A: Hi, as per the authoring guidelines, if more than 1 question is posted, we will answer only the firs...
Q: Suppose that you buy a two-year 7.3% bond at its face value. a-1. What will be your total nominal ...
A: Given: Interest on bond = 7.3% Maturity period = 2 years 1st year inflation = 2.3% 2nd year inflatio...
Q: 9. The Friendly Sausage Factory (FSF) can produce hot dogs at a rate of 5,000 per day. FSF supplies ...
A: The term EOQ stands for economic order quantity, and it represents the number of units that should b...
Q: Dear Financial Adviser, My spouse and I are each 62 and hope to retire in three years. After retir...
A: Retirement planning is an important process for all working individuals because once the individuals...
Q: An investment will pay $25 per year (indefinitely), starting in one year’s time. The annual payments...
A: Given, Annual payment = $25 per year The growth rate of Annual payments = 3% Price of the investment...
Q: If you want to install water system in your house to collect the rain water: a. If the water supply ...
A: Capital budgeting projects are projects that need high initial investment and are considered capital...
Q: A loan applicant inquires about refinancing his primary residence. He reports receiving a competitor...
A: The term mortgage refers to a type of loan that is for the long term, and it usually has the asset a...
Step by step
Solved in 3 steps
- 15- The common stock of Permanent Assurance Corporation currently trades at $40.00 per share, which is approximates its intrinsic value. The company has announced plans to maintain its dividend next year at $1.20 per share. Your research indicates that historically, the firm's dividend payout ratio has averaged 50% while its return on equity averaged 9.0%. The book value of the shares is $25.00 and research shows there is relatively low variation in the firm's operations. You believe the firm's payout ratio and ROE should continue at their historic levels in the future over the long term. Enter your answers on the spreadsheet. Estimate the long-term dividend yield based on the firm’s financial and operational performance based on the absolute approach and round to 2 decimals. Long-term dividend yield:ABC Co. believes that XYZ Corporation’s stock price is going to decline from its current level of ₱82.50 sometime during the next 5 months. For ₱510.25, ABC Co. could buy a 5 month put option for the right to sell 100 shares at a price of ₱83 per share. If ABC Co. bought a 100 share contract for ₱510.25 and XYZ Corporation’s stock price actually dropped to ₱63, what would be the net profit (after transactions costs but before taxes) of ABC Co.?a. ₱1,439.75b. ₱1,489.75c. ₱1,950.00d. ₱2,000.00e. ₱2,435.0016 - The common stock of Permanent Assurance Corporation currently trades at $40.00 per share, which is approximates its intrinsic value. The company has announced plans to maintain its dividend next year at $1.20 per share. Your research indicates that historically, the firm's dividend payout ratio has averaged 50% while its return on equity averaged 9.0%. The book value of the shares is $25.00 and research shows there is relatively low variation in the firm's operations. You believe the firm's payout ratio and ROE should continue at their historic levels in the future over the long term. Enter your answers on the spreadsheet Estimate the long-term growth rate for the firm’s EPS, cash flow, and dividends based on the absolute approach and round to 2 decimals. Long-term growth rate:
- Antiques R Us is a mature manufacturing firm. The company just paid a dividend of $8, but management expects to reduce the payout by 6 percent per year indefinitely.If you require a return of 13 percent on this stock, what will you pay for a share today? choose the correct option: A. 39.58 B.39.97 C. 107.43 D. 42.11 E. 39.18Company A distributed a dividend of $ 4 per share last year. If the company is expected to distribute the same amount of dividends in the following years and the least profitability rate investors expect is 10%, what is the real value of the shares of company A? If the stock of this company is currently trading at 30 USD, can the relevant stock be purchased?a) 45 and must be purchasedb) 70.83 and must be purchasedc) 70.83 and should not be boughtd) 40 and should not be bought e) 40 and must be purchased ===================== How much money will be accumulated at the end of the 2nd year in our account where we deposit 700 USD at the beginning of each year with 9% interest?a) 4599,67b) 2750,25c) 1594,67d) 4200,25e) 5381,25 -------------------- How many USD should a person who constantly wants to receive 4500 USD at the end of each year invest in a bank that pays 12.5% interest today?a) 24000b) 40000 c) 10000d) 36000e) 2800036-The EBIT of the unlevered company is OMR 8,000; value of unlevered company (Vu) is OMR 80,000 and the corporate tax rate is 30%, then what is unlevered cost of equity (Unlevered Ke) under Modigliani-Miller Model? a. 33.33% b. 7% c. 8.33% d. 25% Clear my choice
- Consider a company that pays out all its earnings (i.e., the payout ratio = 1 or plowback/retention ratio=0). The required return for the firm is 13%. Compute the intrinsic P/E if its ROE is 15%. Compute the intrinsic P/E if its ROE is 20%. Discuss why your answers to parts (a) and (b) differ or do not differ from one another. Suppose that the company’s ROE is 13%. Compute its intrinsic P/E value. Would the answer to part (d) change if the company retained half of its earnings instead of paying all of them out? Discuss why or why not.N7 Wail Inc. is currently a firm that has 2 million shares of stock outstanding with a market price of $25 a share and outstanding debt of $30 million. The debt interest rate is 10%. Its cost of equity is 17 percent and the tax rate is 35 percent. For some reason related to one of the controlling shareholders’ preference, the company wants to get rid of all its debt. After recapitalization, what is the cost of equity?17 - The common stock of Permanent Assurance Corporation currently trades at $40.00 per share, which is approximates its intrinsic value. The company has announced plans to maintain its dividend next year at $1.20 per share. Your research indicates that historically, the firm's dividend payout ratio has averaged 50% while its return on equity averaged 9.0%. The book value of the shares is $25.00 and research shows there is relatively low variation in the firm's operations. You believe the firm's payout ratio and ROE should continue at their historic levels in the future over the long term. Enter your answers on the spreadsheet Estimate the expected annual rate of return on the common over the long term based on the absolute approach and round to 2 decimals. Expected annual rate of return:
- 9. a. Doldrums Plastics has been paying a $3 dividend each year for two years andcompany reports indicate that management intends to continue this dividendpayment for the foreseeable future. The market determined required rate ofreturn on Doldrums's common stock is 15 percent, what will be the price of a shareof stock? b. Suppose that an aggressive new Chief Executive Officer, Dee Uamoca, is hired byDoldrums. Because of the productive policies and processes instituted byUamoca, capital market investors anticipate that Doldrums's earnings anddividends will increase at a constant 8 percent rate beginning immediately. Whatwould be the price of a share of Doldrums common stock if the required rate ofreturn remains at 15 percent?No-Growth Industries pays out all of its earnings as dividends. It will pay its next $6 per share dividend in a year. The discount rate is 14%. a. What is the price-earnings ratio of the company? (Do not round intermediate calculations. Round your answer to 2 decimal places.) b. What would the P/E ratio be if the discount rate were 10%? (Round your answer to 2 decimal places.)A company will produce $3.00 in earnings per share at the end of the year. Reinvested earnings can produce a 14% return on equity. What is the PVGO if the company decides on a 30.0% plowback policy? Assume that investors have a 9.0% required rate of return. a. $10.42 b. $12.56 c. $13.86 d. $15.56