You are analyzing a large stable company. For the year ending 12/31/05 the company reported earnings of $58,900 and book value at the end of 2005 was $371,700. You expect earnings to grow at 5% a year in perpetuity, and the dividend payout ratio of 70% to continue. The company borrows at 8%, and has a cost of equity of 12%. The company has 25,000 shares outstanding. what is the estimate of price per share using the dividend discount model at 12/31/05?

Q: Ivanhoe, Inc., is a mature firm that is growing at a constant rate of 5.62 percent per year. The…

A: Market value of company stock is present value of all future cash flows that is Calculated using…

Q: What is the current value per share?

A: The current value per share means the price of share prevailing in the market. The discount rate is…

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: 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: Pak China Railroad reported net income of $770 million after interest expenses of $320 million in a…

A: FCFF = Net income + depreciation+(interest)*(1-tax rate) - Capital Expenses = $770 + $960 + $204.80…

Q: BIG TECH Inc. sells at $40 per share, and its latest 12-month earnings were   $8 per share, of…

A:

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: Biarritz Corp. is growing quickly. Dividends are expected to grow at a ratr of 28 percent for the…

A: Dividend discount model: This model attempts to predict the price of the stock which is based on the…

Q: The Bell Weather Co. is a new firm in a rapidly growing industry. The company is planning on…

A: Current value of one share is the present value of the future cash flows from the stock. Future cash…

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: 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: Oriole, Inc., is a mature firm that is growing at a constant rate of 7.15 percent per year. The last…

A: As per Dividend Discount Model, P0= D1 / (ke-g) Where D1 = Expected Dividend  D1 =D0*(1+g) ke =…

Q: A business starts this year with 2,500,000 assets with no debt. The expected ROE equals 10%. Suppose…

A: Return on equity (ROE) is used to measure the returns from shareholder’s equity. Shareholder’s…

Q: Union Pacific Railroad reported net income of $770 million after interest expenses of $320 million…

A: Equity value refers to the sum total value of the firm acquired from the shareholders and owners of…

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

A: Value of share is present value of dividends  Terminal value of the share is calculated using…

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 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: Biarritz Corp. is growing quickly. Dividends are expected to grow at a rate of 30 percent for the…

A: Share is a security which is offered or issued by the corporates to arrange the funds. Share prices…

Q: MacJolly Corporation is expecting a cash flow of P3,000,000 next year and it is expected to…

A: The value of the company refers to the present value of free cash flows that are expected to be…

Q: Pak China Railroad reported net income of $770 million after interest expenses of $320 million in a…

A: Free cash flow to the firm(FCFF) is the cash generated by the company after accounting for cash…

Q: CSL Corporation is a mid-sized transportation firm with 10 million shares outstanding, trading at $…

A: Cost of capital is defined as the cost, which represents the company's return for achieving for the…

Q: the required return is 10 percent, and the company just paid a dividend of $3.70, what is the…

A: Dividend discount model can be used to find the current share price. It is a valuation model that…

Q: Pak China Railroad reported net income of $770 million after interest expenses of $320 million in a…

A: Net Income = 770 million Depreciation = 960 million Capital Spending = 1200 million Change in…

Q: You are a financial manager for Shah Corporation. The firm is facing financing issues because of the…

A: Dividend paid last year is $0.40 Degrowth rate in dividends for 5 years is 1.05% Contant dividend…

Q: An investor estimates that next year’s sales for Dursley’s Hotels, Inc. should amount to about $100…

A: 1. Net income = Sales * Net profit margin %

Q: Union Pacific Railroad reported net income of $770 million after interest expenses of $320 million…

A: The total cash that a company has to pay off to its liabilities and dividend to its shareholders is…

Q: The Notre dame Explorers company is expected to pay dividends that will grow at a 21% rate from year…

A:

Q: Oriole, Inc., is a mature firm that is growing at a constant rate of 6.02 percent per year. The last…

A: As per dividend discount model,  P0 =D1 /(ke-g) Where P0 =current market price D1 = D0*(1+g) i.e.…

Q: The Ethereum Imports Company’s EPS in 2011 was $3.00, and in 2006 it was $1.90. The company’s payout…

A: In the given question we need to compute : Dempere’s EPS growth rate , dividend in 2012 , firm’s…

Q: Synovec Co. is growing quickly. Dividends are expected to grow at a rate of 30 percent for the next…

A: Current dividend = $ 2.65 Growth rate for 3 years = 30% Growth rate after 3 years = 4% Required…

Q: An all-equity firm had a dividend expense of $45,000 last year.  The market value of the firmis…

A: Market value today, V is associted with the total expected dividend expense D1 via the following…

Q: Assume that you are the financial staff of Vanderheiden Inc., and you have collected the following…

A: Cost of equity = [D1/P0(1-f)] + g where D1 = Next year dividend Po = Current stock price f =…

Q: You are trying to determine the WACC for a company.  It has the following characteristics.  The…

A: WACC: WACC or the weighted average cost of capital is the return that a company must earn in order…

Q: navel county choppers, inc., is experiencing rapid growth. the company expects dividends to grow at…

A: As per Dividend Discount Model,P12= D13/(ke-g)WhereD13 = Expected Dividend for year 13ke = Expected…

Q: Last year, Headline News Corporation paid $600,000 in dividends and retained $360,000 of the…

A: Dividend: It is that share of the profit which is distributed among the company’s shareholders.

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: Acme Inc. had net profits of $1,000,000 last year, has 100,000 shares outstanding and has maintained…

A: Net profit = $ 1,000,000 Number of shares = 100,000 Earning per share = 1,000,000/100,000 = $ 10…

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: 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: 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.