An investor gathers the following information about a company: $5.00 Current earnings per share Current dividend per share Required rate of return $3.00 15.0% Return on equity (ROE) 17.5% What is the value of the company's stock?
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- In the year of 2019, the Profits recorded were $87,000 million, dividend was $66,000 and the retained earnings was $11,000 Find corporate taxAn investor company purchased 65,000 of the 200,000 outstanding shares of the investee company's common stock for $347,000 on January 1, 2021. During 2021, the investee company declared dividends of $31,000 and reported earnings for the year of $249,000. If the investor company uses the equity method of accounting for its investment in the investee company, it should report Investment Income from the investee company for 2021 in the amount of $__________. (Do not round your answer for any part of the computation.)A convertible bond has a par value of $1,000, but its current market price is $950. The current priceof the issuing company's stock is $19, and the conversion ratio is 40 shares. The bond's conversionpremium is _________.
- Dogs R Us reported a profit margin of 11.00 percent, total asset turnover of 0.80 times, debt-to-equity of 0.70 times, net income of $550,000, and dividends paid to common stockholders of $330,000. The firm has no preferred stock outstanding. What is Dogs R Us’s internal growth rate?The CFO of Axis Manufacturing is evaluating the introduction of a new product. The costs of a recently completed marketing study for the new product and the possible increase in the sales of a related product made by Axis are best described (respectively) as follows: a. Opportunity cost b. Depreciation cost c. Sunk costlink co just paid a dividend of $1.00 per share. Analysts expect its dividend to grow at 20% per year for the next two years and then 3% per year thereafter. If the required rate of return in the stock is 7%, calculate the current value of the stock. $32.49 $34.77 $35.82 $36.00 $37.20
- G&M Motors is currently an all equity financed firm. It expects to generate EBIT of $30 million over the next year. Assume that G&M Motors’ EBIT is not expected to grow in the future and that all earnings are paid out as dividends. Currently G&M has 10 million shares outstanding and its stock is trading at $40.00 per share. G&M is considering changing its capital structure by borrowing $100 million at an interest rate of 2% and using the proceeds to repurchase shares at its current price ($40.00 per share). Assume perfect capital markets. After the re-capitalisation, G&M ʹs earnings per share (EPS) and the equity cost of capital are closest to: A. $2.90 and 14.55% B. $3 and 7.5% C. $3.73 and 9.3% D. $2.8 and 10.8%Bear Stationaries is thinking about expanding its facilities. In considering the expansion, Bear’s CFO has obtained the following information: The expansion will require the company to purchase today (t = 0) $5 million of equipment. The equipment will be depreciated over the following four years at the following rate: Year 1: 33% Year 2: 45 Year 3: 15 Year 4: 7 The expansion will require the company to increase its net operating working capital by $500,000 today (t = 0). This net operating working capital will be recovered at the end of four years (t = 4). The equipment is not expected to have any salvage value at the end of four years. The company’s operating costs, excluding depreciation, are expected to be 60 percent of the company’s annual sales. The expansion will increase the company’s dollar sales. The projected increases, all relative to current sales are: Year 1: $3.0 million Year 2: 3.5 million Year 3: 4.5 million Year 4: 4.0 million (For example, in Year 4…67. Earnings that are not paid as dividends to stockholders and have cumulative amount are classified as A. non-paid earnings B. common earnings C. retained earnings D. preferred earnings
- Kingdom Enterprises is a Indian exporter of agriculture products and files all of its financial statements in Indian Rupees (INR). The company’s director, George Bidden, an American national has been praised for his performance. The head office management disagrees, arguing that sales in America have dropped significantly in recent years. Discuss whose point of view is more realistic. 2018 2019 2020 Total Net Sales, INR 2,542,991 2,831,711 3,010,000 Percent sales from America 26% 28% 23% Average Exchange Rate (INR/$) INR 70/$ INR 69.5/$ INR 71.21/$What process does the net present value method use to help management determine whether a project is acceptable to a company? Options : A. It discounts net cash flows to their present value and then compares that value to the capital outlay required by the project.B. It determines the interest rate that will cause the present value of the capital expenditure to equal the present value of the expected net cash flows.C. It divides the present value of net cash flows by the initial investment to determine the profitability index of the project.D. It identifies the time period required to recover the cost of the capital investment from the net annual cash flow produced by the project.A construction company is considering two different investments. I sent the cash flows of these investments to you. Find the current net value of these two investments, assuming the desired rate of profit as 15%.