2) You have been asked to estimate the cost of equity for Holtonholdings a firm with operations in there difference business –retailing hotels and travels. you have collected information on thefirms operations and of comparable in each of the businesses.Holton holdings has debts of $1 billion and the corporate tax rate is28%Revenuescomparable firms, unleveredbetaRetailing$400 million0.85Software$400 million1.15Travel$800 million1.35A) Estimate the bottom up beta unlevered beta for HoltonholdingsB) Estimate the bottom up levered beta for Holton holdings 4)Johnson and Johnson had a return on equity in 2020 of 31.4%andpaid out 36% of it earning as depends it earned a net income of$1.625million on a book value of equity of $5,171million .asconsequence of the covid pandemic .the return on equity isexpected to drop 25%in 2021land that the dividend pay out ratio willremain unchangedA) Estimate the growth rate in earnings based upon 2020 numbersB)Estimate the growth rate in 2020when the ROE drops from 31.4%to 25%

Since you have posted a multiple question therefore, as per the guidelines wi will solve only first…

2) You have been asked to estimate the cost of equity for Holton holdings a firm with operations in there difference business - retailing hotels and travels. you have collected information on the firms operations and of comparable in each of the businesses. Holton holdings has debts of $1 billion and the corporate tax rate is 28%

2) You have been asked to estimate the cost of equity for Holton holdings a firm with operations in there difference business - retailing hotels and travels. you have collected information on the firms operations and of comparable in each of the businesses. Holton holdings has debts of $1 billion and the corporate tax rate is 28%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Flo's Restaurant has sales of $ 418,000, total equity of $ 224,400, tax rate of 23%, debt-equity ratio of .37, and a profit margin of 5.1%. Calculate ROA
Suppose Rocky Brands has earnings per share of $2.30 and EBITDA of $30.7 million. The firm also has 5.4 million shares outstanding and debt of $125 million (net of cash). You believe Deckers Outdoor Corporation is comparable to Rocky Brands in terms of its underlying business, but Deckers has no debt. If Deckers has a P/E of 13.3 and an enterprise value to EBITDA multiple of 7.4, estimate the value of Rocky Brands stock using both multiples. Which estimate is likely to be more accurate? The value of Rocky Brands stock using the P/E ratio is $ million. (Round to one decimal place.)
Two firms have sales of $1 million each. Other financial information is asfollows (refer to image): What are the operating profit margins and the net profit margins for these two firms? What are their returns on assets and on equity? Why are they different?
None
Food and Health Company is expanding and has an average-risk project under consideration. The company decides to fund the project in the same manner as the company’s existing capital structure. The cost of debt is 9.00%, the cost of preferred stock is 12.00%, the cost of common stock is 16.00%, and the WACC adjusted for taxes is 11.50%. Incremental cash flows: Category T0 T1 T2 T3 Investment -$2,500,000 NWC -$250,000 $250,000 Operating Cash Flow $750,000 $750,000 $750,000 Salvage $50,000 Given the expected incremental cash flows provided in this question what is the net present value (NPV) of this project? Show all steps, workings, and formula(s) clearly.
Bank Y and Bank Z both have assets of $1 billion. The return on assets for both banks is the same. Bank Y has liabilities of $750 million while Bank Z's liabilities are $850 million. In which bank would you prefer to hold an equity stake? Instructions: Enter your numeric responses rounded to the nearest whole number. If both banks have $1 billion in assets and have the same return on assets, then net profit for the two banks. Bank Y has bank capital of $ million, so the return on after taxes must be the same million while Bank Z has bank capital of $ for Bank Z. equity is higher Bank Z has a higher assets is financed from borTowed leverage ratio than Bank Y; however, a higher portion of its funds. Therefore, Bank Z represents a riskier investment. 9M
Denver, Incorporated, has sales of $13 million, total assets of $11 million, and total debt of $6.4 million. Assume the profit margin is 6 percent. a. What is the company's net income? (Do not round intermediate calculations and enter your answer in dollars, not millions of dollars, e.g., 1,234,567.) b. What is the company's ROA? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is the company's ROE? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Net income b. ROA % c. ROE %
Orlando Landscaping has current assets of $5,100, net fixed assets of $23,000, current liabilities of 4,300 and long-term debt of 7,400. What is the value of the Shareholders equity account for this firm? How much is net working capital? Brighton Electric Inc. has sales of $586,000, cost of $247,000, depreciation expense of $43,000, interest expense of $32,000 and a tax rate of 35%. Suppose the firm paid out $73,000 in cash dividends. What is the addition to retained earnings? Friers Industry Inc. purchased new machinery three years ago for $7 million. The machinery can be sold to Simpson Industries today for $4.9 million. Friers current statement of financial position shows net fixed assets of $3.7 million, current liabilities of $1.1 million, and net working capital of $380,000. If all the current assets were liquidated today, the company would receive $1.6 million cash. What is the book value of Friers’ assets today? What is the market value?
Bank Y and Bank Z both have assets of $1 billion. The return on assets for both banks is the same. Bank Y has liabilities of $750 million while Bank Z's liabilities are $850 million. In which bank would you prefer to hold an equity stake? Instructions: Enter your numeric responses rounded to the nearest whole number. If both banks have $1 billion in assets and have the same return on assets, then net profit for the two banks. Bank Y has bank capital of $ million, so the return on after taxes must be the same million while Bank Z has bank capital of $ for Bank Z. equity is higher Bank Z has a higher assets is financed from borTowed leverage ratio than Bank Y; however, a higher portion of its funds. Therefore, Bank Z represents a riskier investment. 9M
Musharaka with Profits Assume the following:_ A company is importing and selling Mercedes cars. An Islamic bank invests US$8 million for an 80% profit share. An investor invests US$2 million for a 20% profit share. The investor is to be paid a 10% management fee as a percentage of profit after expenses. Assume: Sale proceeds = US$12,400,000 Expenses = US$200,000 Calculate: 1. The total return to the bank: 2. The total return to the investor: please provide an accurate and step by step answer.
Nataro, Incorporated, has sales of $674,000, costs of $336,000, depreciation expense of $80,000, interest expense of $50,000, and a tax rate of 22 percent. What is the net income for this firm? (Do not round intermediate calculations.)
Nataro, Incorporated, has sales of $666, 000, costs of $336, 000, depreciation expense of $ 81,000, interest expense of $46,000, and a tax rate of 23 percent. What is the net income for this firm?

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