Suppose that a company yields mean returns of 20% (equity), and 9% mean returns on every peso the company invests (debt) in a certain alternative. What would be the best decision if the MARR and ROR calculated is 12%?

Q: A firm has an expected return on equity of 16% and an after-tax cost of debt of 8%. What debt-equity…

A: The sum of a company's short-term debt, long-term debt, and other fixed payment commitments (such as…

Q: Express Industry’s expected net income for next year is $1.6 million. Its target, and current,…

A: Under the residual dividend policy, the dividends are paid to shareholders after the profits for the…

Q: The risk-free rate of return is 8%, the expected rate of return on the market portfolio is 15%, and…

A: Risk free rate of return is 8% Expected rate of return of market portfolio is 15% Beta of stock…

Q: The MEDCOM firm is currently selling for €32, with trailing 12-month earnings and dividends of €1.23…

A: There are various financial measures that help to ascertain the fundamental price of a stock and…

Q: Soju Ltd is currently trading at $39, and recently paid an annual dividend of $4.5. If it is…

A: Last dividend (D0) = $4.5 Stock price (P0) = $39 ROE = 8% Retention ratio = 30% Growth rate (G) =…

Q: You are given the following information about a firm. The growth rate equals 8 percent; return of…

A: Return on assets is one of the measure which shows how much net income or earnings are generated on…

Q: A firm is expected to earn $8 per share. The pay-out ratio is 60% and it will remain same. If the…

A: Given: Earning = $ 8 per share Pay out ratio = 60% ROE = 25%

Q: The earnings, dividends, and stock price of Shelby Inc. are expected to grow at 8% per year in the…

A: Cost of equity is the rate of return that an investor may expect from the amount which the investor…

Q: An analyst is trying to estimate the intrinsic value of the stock of ATR Kim Eng. The analyst…

A: Free Cash Flow Next Year = 25,000,000 Growth Rate = 7% WACC = 10%

Q: A certain company has expected next year earnings per share of $6. If the company wants to reinvest…

A: The question is based on the concept of Stock valuation

Q: Tescac’s assets are worth $290. It has $175 of zero-coupon debt outstanding that is due to be repaid…

A: Both, N(d1) and N(d2) computed by the use of:

Q: Castle-in-Sand generates a rate of return of 20% on its investments and maintains a plowback ratio…

A: It is given that the rate of return on investment is 20% and plowback or retention ratio is 0.30…

Q: An analyst is trying to estimate the intrinsic value of the stock of ATR Kim Eng. The analyst…

A: Value of operations Free cash flow/(WACC-Growth rate)   P25/(10%-7%)   P25/3%   P 833.33

Q: ABC requires an investment of $50,000 and borrows $20,000 at 6%. If the return on equity is 15%,…

A: Total capital required, C = $ 50,000Debt = D = 20,000Hence, equity = E = C - D = 50,000 - 20,000 =…

Q: Percy Grainger & Company currently earns $3.00 per share and the company plans to pay 40% of its…

A: The required rate of return is the return company estimated on the basis of past information and…

Q: P200 million of long-term debt and preferred stock and 30 million outstanding shares of common…

A: Total value = Next year cash flow / WACC - growth rate Total value = 25 / 0.1 - 0.07 Total value =…

Q: A firm is expected to earn $8 per share. The pay-out ratio is 60% and it will remain same. If the…

A: Present value of growth opportunities is value added to the company for reinvesting earnings

Q: A company has a return on equity of 32 percent and plowback ratio of 50 percent. If the earnings of…

A: The Stock price is the current price of the share that is available in the stock market.

Q: You are given the following information about a firm: The growth rate equals 8 percent; return on…

A: Return on equity can be calculated by multiplying the return on assets by the equity multiplier. It…

Q: Suppose a company will issue new 20-year debt with a par value of $1,000 and a coupon rate of 9%,…

A: Cost of debt is similer to the yield of bond issue which is given by, Y = (I + ( F - NP)/n)/((F +…

Q: Consider a company whose stock is trading at $110 per share. This company requires an 0.2 minimum…

A: Required rate of return = 0.2  Dividend per share = 4  Growth rate = 0.1

Q: You are told by your investment advisor that Laduma Co. is expected to earn R5 per share next year,…

A: Computation as follows: Hence, the value of share is R 47.33. The present market price of share is…

Q: You forecast to have a ROE of 14%, and dividend payout ratio of 12%. Currently the company has a…

A: PEG ratio is the ratio of price by earning divided by growth of earning . formula: PEG=P/E…

Q: What is the weighted average cost of capital (WACC) for a company with 30% equity, 70% debt, an…

A: Weighted average cost of capital is the average return which the business is expected to pay its…

Q: Suppose the interest rate is 12 percent and the firm is expected to grow at a rate of 7 percent for…

A: The present value is the value of the sum received at time 0 or the current period. It is the value…

Q: Prima Corporation’s dividend per share next year is expected to be RM3.02 and the firm expects…

A: Dividend growth model is a method of valuation of stock, where the dividend paid by the company…

Q: Consider the following information Year                    Profit                Ending book value…

A: The present value of a future sum of money or stream of cash flows with a fixed rate of return is…

Q: You are going to value Lauryn's Doll Co. using the FCF model. After consulting various sources, you…

A: Here, To Find: Value of the firm =?

Q: A financial analyst estimates that the current risk-free rate for NN company is 6.25 percent, the…

A: Gordon growth model provides the current price of a share if it has a constant growth till infinity

Q: A firm has a plowback ratio (retention rate) of 0.5 and ROE of 15%. Its current earning is BDT 5 per…

A: EPS = BDT 5 Plowback ratio = 0.50 Payout ratio = 1-Plowback ratio                      = 1-0.50…

Q: Deployment Specialists pays a current (annual) dividend of $1.00 and is expected to grow at 20% for…

A: The calculation of the stock’s intrinsic value is as follows:

Q: What is the value of the firm

A: Free Cash Flow: It refers to the amount of money left for the firm after paying all the operating…

Q: You are going to value Lauryn's Doll Co. using the FCF model. After consulting various sources, you…

A: Calculation of Asset Beta:  Asset Beta = Equity Beta/1+1-Tax*Debt - Equity ratioAsset Beta =…

Q: Castle-in-Sand generates a rate of return of 20% on its investments and maintains a plowback ratio…

A: Growth rate= Return on equity*Plowback ratio = 0.20*0.30 = 0.060 or 6.00% Dividend= EPS*(1-Plowback…

Q: You are told by yourinvestment advisor that Laduma Co. is expected to earn R5 per share next year,…

A: Dividend growth model is the valuation model that calculates the fair value of the stock on the…

Q: You are told by your investment advisor that Laduma Co. is expected to earn R5 per share next year,…

A: Formulas:

Q: the investor's required rate of return is 15 percent, the expected level of earnings at the end of…

A: Price of equity can be determined by the dividend discount model and P/E ratio method.

Q: oju Ltd is currently trading at $39, and recently paid an annual dividend of $4.5. If it is expected…

A: Current stock price (P0) = $39 Recent dividend (D0) = $4.5 Retention ratio = 30% ROE = 8% Annual…

Q: The future earnings, dividends, and common stock price of Core-Tech, Inc. are expected to grow 6%…

A:

Q: You are told by your investment advisor that Ladumo Co. is expected to earn R5 per share next year,…

A: Calculation of value of the stock: Answer: Total value of stock is R47.33

Q: You are told by your investment advisor that Laduma Co. is expected to earn R5 per share next year,…

A: The ratio which denotes the percentage of earnings which should be paid as dividend is known as…

Q: Based on the following information, fill the information in the given below Income statement of a…

A: The information is given regarding a company. Required  Fill out the given below Income statement…

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: What is the current price? What is the price expected to be in year 5?

A: Current Price = Current Dividend x (1 + Growth Rate) / (Required Return - Growth Rate) Current…

Q: depa robability of a boom year is 65 percent and the probability of a rece hat the company will…

A: Introduction : The debt are to be paid with interest and payment on the maturity.