5) The current year's profits of Ferro Inc. is 1200 b and the next year's profits are estimated as 1400 L. The current year's dividend per face value of 1 b is 35%. Compute the intrinsic value of a share of this company for an investor whose required rate of return is 25%.

Q: Arts and Crafts, Inc. will pay a dividend of $2 per share in 1 year. It sells at $40 a share, and…

A: The expected growth rate of the company’s dividend is 5%. Computation of expected growth rate:…

Q: a) Newdeal Inc. follows a policy of distributing 45% of its profits and investing the rest in the…

A: Intrinsic Value of stock = [ Expected dividend after 1 year / ( Required rate - Growth rate ) ]…

Q: How much are you willing to pay for one share of Delphia stock if the company just paid a $1.34…

A:

Q: The current year profits of Levelex Inc. is 1.000.000₺ and expected profits for the next year is…

A: Constant dividend model is the model of share valuation in which the share price is calculated on…

Q: A company’s common stock is currently selling at $40 per share. Its most recent dividend was $1.60,…

A: Cost of retained earnings is calculated by dividend growth model. Last dividend paid = 1.6 growth…

Q: Dividends for Sepia Ltd are expected to be $0.50 next year. The company retains 25% of its earnings…

A: Expected dividend = $0.50 Retention Ratio = 25%  Rate of return on investment = 15%  Rate of return…

Q: The dividends and stock price of Mimi Company are expected to grow at 5 percent per year at very far…

A: Last dividend (D0) = P 2.50 Stock price (P0) = P 25 Floatation cost (F) = P 2.50 Growth rate (g) =…

Q: Walter Utilities is a dividend-paying company and is expected to pay an annual dividend of $1.45 at…

A: Formula: Expected rate of return = (Expected dividend/Current stock price) + Growth rate

Q: BM expects to pay a dividend of $8 next year and expects these dividends to grow at 3.15% a year.…

A: IBM Share Price = Dividend Next Year / (Cost of Equity - Growth Rate)

Q: Suppose Acap Corporation will pay a dividend of $2.80 per share at the end of this year and a…

A: Dividend for year 1(D1) = $2.80 Dividend for year 2(D2) = $3.00 Stock Price after  2 years(P2) = $52…

Q: By how much would the cost of new stock exceed the cost of retained earnings?

A: Retained earnings are the revenues or profits that an organization has produced to date, less any…

Q: Johnson Products earned $4.20 per share last year and paid a dividend of $1.55 per share. If ROE was…

A:

Q: Frahill Co. Ltd plans to pay a dividend of $2.45 per share in the coming year and anticipates that…

A: Share is the security which is offered by the firm to arrange the funds. Share prices fluctuates…

Q: The current year's profits of Ferro Inc. is 1200 and the next year's profits are estimated as 1400…

A: Given, current Profit  = 1200 next year profit = 1400 growth rate = (next year profit / current year…

Q: Red, Inc., Yellow Corp., and Blue Company each will pay a dividend of $3.25 next year. The growth…

A: According to the general rule of finance, the value of a financial asset represents a sum of present…

Q: A company pays a current dividend of $1.20 per share of common stock. The annual dividend will…

A: Capital gain means the increase in price of security during the holding period. But if the security…

Q: The dividends and stock price of Mimi Company are expected to grow at 5 percent per year at very far…

A: Return on retained earnings =(D1/Current price)+Growth rate   where D1 = Dividend next year   D1  =…

Q: Aboudy Corporation's stock price is currently $22.00 per share. The company has just paid a dividend…

A: The formula used is shown:

Q: Salte Corporation is issuing new common stock at a market price of $27.00. Dividends last year were…

A: The below expression can be used to calculate cost of common equity:

Q: Sigma Inc. has just paid a dividend of $2.50 per share, and it is expected to pay a dividend of…

A: The paid dividend (D0) is $2.50. The expected pay dividend (D1) is $2.75. The required return on…

Q: The earnings, dividends, and stock price of Stan Company are expected to grow at 7 percent per year…

A: We need to use constant growth model to calculate cost of retain earning. The equation is Stock…

Q: Miller Corporation just paid a dividend of $1.25 a share (that is, D0=$1.25). The dividend is…

A: Given information in question Current dividend = $1.25 Growth rate = 10% for first 3 year and 6%…

Q: 5) The current year's profits of Ferro Inc. is 1200 b and the next year's profits are estimated as…

A: Value of share is calculated by present value of expected dividend for a growing perpetuity. By DGM:…

Q: Red, Inc., Yellow Corp., and Blue Company each will pay a dividend of $2.35 next year. The growth…

A: The following formula will be used:

Q: The dividends and stock price of Mikey Company are expected to grow at 7 percent per year after this…

A: Floatation cost refers to the cost of the issue of new shares. We do not consider flotation cost for…

Q: Red, Inc., Yellow Corp., and Blue Company each will pay a dividend of $3.25 next year. The growth…

A: Given Information: Dividend = $3.25  Growth rate in dividends = 5% Required return for Red Inc =…

Q: a) Newdeal Inc. follows a policy of distributing 45% of its profits and investing the rest in the…

A: Growth rate = Retention ratio * Average Profitability Intrinsic Value = Expected Dividend / (…

Q: HighGrowth Company has a stock price of $22. The firm will pay a dividend next year of $0.97, and…

A: In this question we require to compute the cost of equity capital for HighGrowth. This question can…

Q: ZDL Ltd's earnings per share next year is expected to be $1.50 and the earnings are expected to grow…

A: Present value of growth opportunity (PVGO) refers to the valuation method used by the company to…

Q: Newdeal Inc. follows a policy of distributing 45% of its profits and investing the rest in the…

A: Dividend Payout Ratio = 45% Retention Ratio = 1- Dividend Payout Ratio = 1-45% = 55% ROE = 20%…

Q: Unheardof, Ic., has just paid a dividend of $5 per share. This dividend is anticipated to increase…

A: In the given question we need to compute the market value of a share of the company with following…

Q: a) Newdeal Inc. follows a policy of distributing 45% of its profits and investing the rest in the…

A: Growth rate is calculated by the product of average profitability and the retention ration. Growth…

Q: Assume ABC Corp. pays the dividend of $5.60 this year. For the next 25 years, the firm's dividend…

A: The value which is determined by how much someone is willing to pay for it is the value of the…

Q: This year, Hope Corporation paid a dividend of $0.50 per share.  The company expect dividends to…

A: Value of share price = [D0 x (1 + g)]/(r - g) D0 = Current dividend g = Growth rate r = required…

Q: The dividends and stock price of Mimi Company are expected to grow at 5 percent per year at very far…

A: The given problem can be solved using constant dividend growth model.

Q: Healthy Foods just paid its annual dividend of $1.62 a share. The firm recently announced that all…

A: Dividend discount model is a security valuation method which is used to forecast or predict the…

Q: a) Newdeal Inc. follows a policy of distributing 45% of its profits and investing the rest in the…

A: Dividend Payout Ratio = 45% Retention Ratio = 1− Dividend Payout Ratio = 1−45% = 55% ROE = 20%…

Q: Credenza Industries is expected to pay a dividend of $1.50 at the end of the coming year. It is…

A: Expected dividend = $ 1.50 Selling price after 1 year = $ 61 Cost of equity = 9% Current price =…

Q: ABC Inc. paid an annual dividend of $1.78 a share last year. The company is planning on paying…

A:

Q: Red, Inc., Yellow Corp., and Blue Company each will pay a dividend of $4.15 next year. The growth…

A: The dividend discount model states that the dividends that are paid by a company are good indicators…

Q: The newspaper reported last week that SunRise Enterprises earned $34.19 million this year. The…

A: In this case, first, we have to calculate the growth rate & then we would calculate the earnings…

Q: What is the net asset value of an investment company with $10,100,000 in assets, $630,000 in current…

A: Net Asset Value = (Assets - Liabilities) / No. of shares outstanding

Q: Wichita Realty Trust is expected to pay a modest dividend of $1.00/share for two years and then…

A: Given information: Rate of return is 10% Dividend for first two years is $1.00 Dividend for next…

Q: Company BestWare is expected to pay a dividend of $5.91 next year, and the company's stock is…

A: The capital gain yield is the rate of return that is earned due to the increase in the value of the…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.