Assuming the following: 1.4mm outstanding shares 2. $40mm of pre-tax Net Income 3. $9mm of Depreciation 4. PE multiple of 16x 5. $1.75 quarterly dividend which is expected to grow by 4.23% 6. Book value of $115mm 7. Outstanding debt Of $150mm 8. After-tax cost of debt of 6% 9. Current share price of $125 10. Tax rate of 25% 11. EBITDA Multiple of 7x.

Assuming the following: 1.4mm outstanding shares 2. $40mm of pre-tax Net Income 3. $9mm of Depreciation 4. PE multiple of 16x 5. $1.75 quarterly dividend which is expected to grow by 4.23% 6. Book value of $115mm 7. Outstanding debt Of $150mm 8. After-tax cost of debt of 6% 9. Current share price of $125 10. Tax rate of 25% 11. EBITDA Multiple of 7x.

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

See similar textbooks

Similar questions

Hello tutor please solve this all Questions
Assume a company has 10mm outstanding shares of stock that currently trade at $50 per share. Assume the company cost of equity is 18% and its after-tax cost of debt is 6%. Assume the company has $250mm in long term debt and $50mm of other liabilities. What is the WACC?
Calculate way plz
Consider the following average annual returns: Average Return 23.5% 13.1% 7.5% 6.8% 4% Investment Small Stocks S&P 500 Corporate Bonds Treasure Bonds Treasury Bills What is the excess return for corporate bonds? O A. 1.8% OB. 0% OC. 7% OD. 3.5%
If the cost of a telecommunications share is $285.55, calculate the end of quarter dividends that it will pay in perpetuity at a dividend rate of 5.5% compounded quarterly of the purchase price. Round to the nearest cent
A firm with sales of $500,000, net profits after taxes of $20,000, total liabilities of $200,000, and stockholders’ equity of $100,000 will have a return on equity of Select one: a. 5% b. 40% c. 20% d. 10%
Interest versus dividend expense Michaels Corporation expects earnings before interest and taxes to be $43,000 for the current period. Assuming a flat ordinary tax rate of 21%, compute the firm's earnings after taxes and earnings available for common stockholders (earnings after taxes and preferred stock dividends, if any) under the following conditions: a. The firm pays $12,100 in interest. b. The firm pays $12,100 in preferred stock dividends. a. Complete the fragment of Michaels Corporation's income statement below to compute the firm's earnings after taxes and earnings available for common stockholders under condition (a). (Round to the nearest dollar.) EBIT Less: Interest expense Earnings before taxes Less: Taxes (21%) Earnings after taxes Less: Preferred dividends Earnings available for common stockholders $ LA $ $ $
Interest versus dividend expense Michaels Corporation expects earnings before interest and taxes to be $48,000 for the current period. Assuming a flat ordinary tax rate of 27%, compute the firm's earnings after taxes and earnings available for common stockholders (earnings after taxes and preferred stock dividends, if any) under the following conditions: a. The firm pays $13,000 in interest. b. The firm pays $13,000 in preferred stock dividends. a. Complete the fragment of Michaels Corporation's income statement below to compute the firm's earnings after taxes and earnings available for common stockholders under condition (a) (Round to the nearest dollar) EBIT $ Less: Interest expense Earnings before taxes $ Less: Taxes (27%) Earnings after taxes $ Less: Preferred dividends Earnings available for common stockholders
Use the following inputs and the finite horizon from of the residual income model to compute the value of Southern Trust Bank (STB) shares as of 31 December 2007: i. ROE will continue at 15% for the next five years and 10% thereafter with all earnings reinvested (no dividends paid) ii. Cost of equity is 10% iii. Beginning period book value at year-end 2007 is $10
Plz help
Given the following information: Percent of capital structure: Preferred stock Common equity (retained earnings) Debt Additional information: Corporate tax rate. Dividend, preferred $ 5.00 Dividend, expected common $ 5.50 Price, preferred $101.00 Growth rate Bond yield. 34% 4% 5% Flotation cost, preferred $5.20 Price, common $ 74.00 Debt Preferred stock Common equity (retained earnings) Weighted average cost of capital 20% 70 10. Calculate the weighted average cost of capital for Digital Processing Inc. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Notice that this problem asks for the weighted costs. These are the unweighted costs times the weights. Like this: (ka)(wa) weighted cost of debt. Weighted Cost % 0.00%
A firm with sales of $1,000,000, net profits after taxes of $60,000, total assots of $1,500,000, and totol liabilities of $750,000 has a return on equity ot Select one: O a. 15 percent. b. 20 percent. c. 4 percent. O d. 8 percent. e. None of the above

SEE MORE QUESTIONS

Recommended textbooks for you

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

Essentials Of Investments

Finance

ISBN:

9781260013924

Author:

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

Publisher:

Mcgraw-hill Education,

FUNDAMENTALS OF CORPORATE FINANCE

Finance

ISBN:

9781260013962

Author:

BREALEY

Publisher:

RENT MCG

Financial Management: Theory & Practice

Finance

ISBN:

9781337909730

Author:

Brigham

Publisher:

Cengage

Foundations Of Finance

Finance

ISBN:

9780134897264

Author:

KEOWN, Arthur J., Martin, John D., PETTY, J. William

Publisher:

Pearson,

Fundamentals of Financial Management (MindTap Cou…

Finance

ISBN:

9781337395250

Author:

Eugene F. Brigham, Joel F. Houston

Publisher:

Cengage Learning

Corporate Finance (The Mcgraw-hill/Irwin Series i…

Finance

ISBN:

9780077861759

Author:

Stephen A. Ross Franco Modigliani Professor of Financial Economics Professor, Randolph W Westerfield Robert R. Dockson Deans Chair in Bus. Admin., Jeffrey Jaffe, Bradford D Jordan Professor

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS