ve been askedanalyzeechnologyeswith the following information on the companies:PrimarysharesCompanyoutstandingPrice/shareNet IncomeZap Tech100$20$100InfoRock500$6$150Lo Software80$5$20proNumber ofOptionsOutstandingValue peroption10$10.0080$1.5020$0.50Assuming that the three companies have the same expected growth rate in net incomeand share the same return on equity and cost of equity, which of the three companieswould you consider the cheapest? Explain why. (20 points)

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Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter2: Financial Statements, Cash Flow, And Taxes

Section: Chapter Questions

Problem 15SP

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Similar questions

Listed Digital Industry players have the following market value and earnings per share: Player Market Value per share Earnings per share P/E Ratio A 46.50 5.00 B 45.24 6.03 C 16.25 2.18 D 25.11 3.72 E 34.32 4.29 An analyst is looking into the performance of another firm in the same industry but is not listed, the company reported earnings of Php 1.25 per share. How much is the value of the firm?
As a consultant to Bass Inc, you have been provided with the following data D1= $0.67, P0= $27.50 and gl=8%. What is the cost of common from invested earning based on the dividend growth approach? (11.51%, 10.44%, 9.91%, 9.42%, or 10.96%)
Assuming yourself to be Anna, narrate what you would have read in the file. Your narrative should include answers to the following: Note: 1 Retention ratio = 1 – Dividend payout ratio a) What is the current Dividend per share (DPS) for Chatterbox Inc., assuming a 100% dividend payout policy?
Calculate the total cost, proceeds, and gain (or loss) (in $) for the stock market transaction. Company Number ofShares PurchasePrice SellingPrice Commissions TotalCost Proceeds Gain(or Loss) Buy Sell Odd Lot an audio and video products manufacturer 800 $26.37 $32.25 3% 3% $ $ $
You are a consultant working with various companies that are considering incorporating and listing shares on a stock exchange. One of your clients asks you about the various acronyms she has been hearing in conjunction with financial analysis. Explain the following acronyms and how they measure different things but may complement each other: EPS (earnings per share), EBITDA (earnings before interest, taxes, depreciation, and amortization), and NOPAT (net operating profit after taxes).
The file Fortune500 contains data for profits and market capitalizations from a recent sample of firms in the Fortune 500 a. Prepare a scatter diagram to show the relationship between the variables Market Capitalization and Profit in which Market Capitalization is on the vertical axis and Profit is on the horizontal axis. Comment on any relationship between the variables. b. Create a trendline for the relationship between Market Capitalization and Profit. What does the trendline indicate about this relationship?
Begin with the partial model in the file Ch02 P21 Build a Model.xlsx on the textbooks Web site. a. Using the financial statements shown here for Lan Chen Technologies, calculate net operating working capital, total net operating capital, net operating profit after taxes, free cash flow, and return on invested capital for 2020. The federal-plus-state tax rate is 25%. b. Assume there were 15 million shares outstanding at the end of 2019, the year-end closing stock price was 65 per share, and the after-tax cost of capital was 10%. Calculate EVA and MVA for 2020. Lan Chen Technologies: Income Statements for Year Ending December 31 (Millions of Dollars) Lan Chen Technologies: December 31 Balance Sheets (Thousands of Dollars)
The following information is available regarding XYZ Co. sales = $250,000net income = $35,000dividends = $10,000total debt = $100,000total equity = $80,000 What growth rate can be supported without outside financing?
As the assistant to the CFO of Johnstone Inc., you must estimate its cost of common equity. You have been provided with the following data: D0 = $0.80; P0 = $22.50; and gL = 8.00% (constant). Based on the dividend growth model, what is the cost of common from reinvested earnings? 10.69% 11.25% 11.84% 12.43% 13.05%
The following information relates to three companies in the same industry Latest Earnings Dividends Company market price per share per share A $ 35 $11 $0 B $40 $5 $4 C $ 90 $10 $6 Required: Explain and calculate the price -earnings and dividend yield ratios. On the basis of only the foregoing information, which company represents the most attractive investment opportunity to you? Explain.
Use your own words to answer the following questions: Write the formula for the P/E ratio and what it measures? Should you invest in a company with high P/E or low P/E? A company has the following items for the fiscal year 2020: Revenue = 10 million Net income = 4 million The company has 2 million shares of stock Stock price per share = $70 Calculate the company’s earnings per share and P/E ratio
Answer the following questions based on the given information from table of probabilitydistributions and rate of return investment of two companies namely; Celecom Bhd. andPos Selaju Bhd. shares below:Table 2: Probability distributions and rate of returns for Celecom Bhd. and Pos Selaju Bhd. State of Economy Probability of the States Return (%)Celecom Bhd. Return (%)Pos Selaju Bhd.Boom 0.30 25 40Normal 0.50 20 10Recession 0.20 15 20 (i) Solve for the expected rate of return for Celecom Bhd. and Pos Selaju Bhd.shares.(ii) In your opinion, which share is more worth the profit for investment and why?

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