Abilene Industries has a book value per share of $70 on January 1, X1. The predicted earningsper share for the year, X1, is $10. The predicted dividends for X1 is $4. The predictedearnings per share for the year, X2, is $11. The cost of equity is 10%January 1, X1December 31, X1$10?$4Predicted Earning per shareBook value per sharePredicted dividendsWhat is the predicted abnormal earnings for year X2?O $7O $6O $2.40O $3.40$70December 31, X2,$11

Introduction Predicted Earnings: The abnormal earnings valuation method includes both a company's…

Answered: Abilene Industries has a book value per…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

D. (1) The shares of BrightStark Ltd. are expected to generate the following possible returns in one year. What is the expected return over the next 12 months? Assume that the stock pays no dividends. Return 3% 4% 7% 15% 25% Probability 0.05 0.25 0.30 0.25 0.15 (2) Suppose Brightlight, Inc. was trading at $27.29 per share. At that time, it pays an annual dividend of $0.32 per share, and analysts have set a 1-year target price around $33.30 per share. What is the expected return on this stock? (3) What is the price for a stock with an expected dividend and price next year of $1 and $30, respectively? Use a 10% discount rate. (4) What is the current share price for a firm which has just paid a dividend of £2.5 and expects to increase its dividend by 3.5% every year, and the company has a required rate of return of 5%?
Blue Co. has been in the difficult times due to pandemic. The company's analysts predict that earnings and dividends will decline at a rate constant rate of 5% annually. Assume that cost of stock is 11% and dividend to be declared one year from now is P2.00. What will be the price of the company's stock three years from today? *
Q11 A company earns OMR 20 per share at an internal rate of 8%. The firm has a policy of paying 75% of earnings as dividends. If the required rate of return is 10%, what is the price of the share under Walter model? a. OMR 200 b. OMR 100 c. OMR 190 d. OMR 150
15
Find cost of equity if the last dividend paid was $4.00 per share (Do). Current stock price is $32.00. Required return to shareholders is 7%. Return on Equity is 12% and dividend retention ratio is 30%.
4. Determine the average stock in a department with annual sales of $2,425,000 and an annual stock turn of 4.1. Round to the nearest dollar.
9
Life is Beautiful Company Ltd has current earnings per share (EPS) of ₵2. For years 1, 2 and 3, earnings will grow at 15%. For years 4 onwards, earnings growth will be growing at 4% indefinitely. The company pays out 60% of its earnings in dividends. Given a discount rate of 12%, what is the value of the company’s stock?
Simpson Inc. stock provided a return of 8.0%, 15% and -8% returns in the past three years. What is the expected return on stock this stock? 5.00% 5.13% 5.30% 5.60% 6.03% Next
Born On The 4th Of Supply Industrial Goods paid a quarterly dividend of $3.55 per share last quarter. Today, the company announced that future dividends will be increasing by 0.8% quarterly. If you require a 92% annual rate of return, how much, to the nearest cent, are you willing to pay to purchase one share of this stock today? $4.03 $15.43 $16.12 $15.99 $3.92 Give typing answer with explanation and conclusion
- Assume that six months ago you bought 2,500 shares of a stock at $70 per share using a margin. The margin rate was 40% and the interest rate on the margin loan was 8%. Assume no commissions. What is your gain or loss if the current stock price is $71 per share? A. -$1,700 B. $2,500 C. $6,700
A share of stock's expected dividends is $3 per share and the expected price in 1 year is $81 per share. What is the expected return assuming the stock price started i this year at $75? 12% 15% 14% O 13%

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS