Acme Inc. had net profits of $1,000,000 last year, has 100,000 shares outstanding and has maintained a consistent retention ratio of 40% annually. Earnings are expected to grow at 15% for the next three years and then decline to 4% for perpetuity. Acme Inc.'s CFO has estimated their cost of capital at 12%. What is the present value price of the stock?

Q: Alpha Plc has just paid a dividend of $5.00 per share. The company plans to increase its dividend by…

A: Discount rate is the interest rate which is used as cost of capital while calculating the net…

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: Chittenden Enterprises has 632 million shares outstanding. It expects earnings at the end of the…

A: Current share price can be calculated by using dividend discount model. In this model present value…

Q: Panhandle Industries, Inc., currently pays an annual common stock dividend of $8.80 per share. The…

A: Po = D1 / Ke - g   Po = Current market price D1 = Expected dividend Ke = Cost of equity G=Growth…

Q: Soylent Corp expects to generate earnings over the coming twelve months of $$6.656.65 per share…

A: Given:

Q: Our company, Mom and Pop Inc is at the the end of the fiscal year. We observe that in the market our…

A: Dividend Growth Model: It is  valuation model,  where  fair worth of stock is determined , assuming…

Q: Old Nova Inc. just paid its dividend of €5 per share yesterday, which is expected to grow by 1.5%…

A: Value of stock can be found by the present value of dividend and present value of growth of…

Q: TGN Corporation generated FCF of $1,200,000 in the most recently completed year.  FCF is expected to…

A: The free cash flow to the firm shows cash available to equity and debt provides after adjusting for…

Q: Please can I get detailed step by step workings for this question?

A: Formula to calculate share price is: Price per share = Enterprise value/shares outstanding…

Q: Tel-Talk Inc. is a company that provides domestic and international long distance, regional and…

A: a) Cost of equity can be calculated using CAPM model as below: Answer: Cost of equity using CAPM…

Q: Lightbridge corporation has 500,000 shares of common stock that currently trade for $40 per share.…

A: Computation of the market price of share one year from now is shown below:

Q: Sunland Inc.’s common shares currently sell for $35 each. The firm’s management believes that its…

A: Given information: Shares price (P) : $35 (As it is the market price) Dividend paid (D0): $2 Growth…

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: Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 28 percent for the next…

A: As per Dividend Discount Model, P0= D1 / (ke-g) Where D1 = Expected Dividend ke = Expected Return g…

Q: Arts and Crafts, Inc. will pay a dividend of $4 per share in 1 year. It sells at $50 a share, and…

A:

Q: Cold Goose Metal Works, Inc. just reported earnings after tax (net income) of $8,500,000, and a…

A: Given information:- cold cureent status Net income (PAT)=$8,500,000 share outstanding =5,500,000…

Q: Sunland Inc.’s common shares currently sell for $35 each. The firm’s management believes that its…

A: The cost of equity is the return an investor requires by investing in the equity shares of a…

Q: In their most recent fiscal year, XYZ, Inc. had net income of $20 million and total common equity of…

A: Given information : Net income = $20 million Total common equity = $200 million Dividend payout…

Q: Mah Seng Company Berhad had total earnings last year of $5 million but expects total earnings to…

A: Earnings = $5 million This year total earnings = $4,750,000 Outstanding shares = 1 million…

Q: An analyst is trying to estimate the intrinsic value of VN Co. that has a weighted average cost of…

A: Let WACC = r = 10% FCF1 = P 3000 FCF2 = P 4000 FCF3 = P 5000 Growth rate after year 3 (g) = 6%

Q: Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 32 percent for the…

A: A dividend refers to the yield that investors (shareholders) receive periodically for bearing the…

Q: A firm has 80,000 shares of stock outstanding with a market price of $25 per share. If net income…

A: The dividend yield is calculated as the ratio of dividend and the stock price.

Q: VioletRichGold Company has been growing at a rate of 6 percent for the past two years, and the…

A: Dividend is the amount which is paid by a firm to their shareholders for the amount invested by…

Q: Bradfield plc’s shares have been trading at £5.00 over the last few days. The company has just…

A: Current price of a share: £5.00 Number of existing shares outstanding: 100 million Required funding…

Q: Perine, Inc., has balance sheet equity of $5.3 million. At the same time, the income statement shows…

A: Current EPS = net income/ no of outstanding Share Current EPS = 763200/120000 Current EPS =6.36

Q: Lightbridge corporation has 500,000 shares of common stock that currently trade for $40 per share.…

A: Price to earnings ratio (PE ratio) compares the price with earnings per share. It will be calculated…

Q: Last year, National Co. has an Earnings per share of P8. Even though the firm will grow at rate of…

A: We need to use constant growth model to calculate the price of common stock. Common stock price…

Q: Mah Seng Company Berhad had total earnings last year of $5 million but expects total earnings to…

A: Residual dividend company pay the all dividends remaining to shareholders.

Q: The cost of capital is 15% and net income to stockholders generated over the past year and available…

A: Dividend per share =Net income ÷ outstanding shares=$1,000,000÷1,000,000 shares=$1   Dividend Payout…

Q: The Emco Steel Company has experienced a slow (3 percent per year) but steady increase in earnings…

A: Introduction: Dividend policy of the company is characterised as a financial strategy for…

Q: Sorenson Systems, Inc. is expected to pay a dividend of $3.30 at year end (D1), the dividend is…

A: Wacc is the weighted average cost of capital

Q: Mah Seng Company Berhad had total earnings last year of $5 million but expects total earnings to…

A: An organization have different kind of dividend policy and residual dividend policy is one of…

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: Mah Seng Company Berhad had total earnings last year of $5 million but expects total earnings to…

A:

Q: Surf & Turf Hotels is a mature business, although it pays no cash dividends. Next year’s earnings…

A: Here we will use the dividend discount model to do the calculations.

Q: FA corporation recently reported a net ncome of $2,000,000. The company has 500,000 shares of common…

A: a.Calculate the earnings per share (EPS) for current period as follows:

Q: Over the years, Masterson Corporation's stockholders have provided $35,000,000 of capital when they…

A: Market Value Added (MVA) refers to the net difference between the total value added by the investors…

Q: Gentrix Inc. has two major sources of financing—common stock and long-term debt. They currently have…

A: Here,

Q: Banco Industries expect sales to grow at a rapid rate over the next three years, but settle to án…

A: The stock price at the start of year 1 can be calculated as follows: Calculate the terminal value…

Q: Storico Co just paid a dividend of $315 per share. The company will increase its dividend by 20…

A: Dividend at 0th time, D0 = 3.15/share Dividend for next year, D1  =3.15*(1+20%) =3.78 Dividend for…

Q: Panhandle Industries, Inc., currently pays an annual common stock dividend of $2.20 per share. The…

A: given, D0= $2.20g=8%dividend payout = 40%multiple = 8

Conversion Cycle

Conversion cycle is also known as cash cycle or net operating cycle. Conversion cycle refers to how much time a company takes to turn its investments which is done from stock or any other financial resources into cash flows from sales.