ABC Inc. Distributes 70 % of its profits and uses the rest in the operations of the business. The current year dividend rate per face value is and the 40 %. The profitability of total assets is 25 %. Compute the intrinsic value of a share of ABC for an investor whose minimum required rate of return is 32 %.

ABC Inc. Distributes 70 % of its profits and uses the rest in the operations of the business. The current year dividend rate per face value is and the 40 %. The profitability of total assets is 25 %. Compute the intrinsic value of a share of ABC for an investor whose minimum required rate of return is 32 %.

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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You invested in RYURX and RYIHX which each had a loss on the year. RYURX had a year-to-date loss of 5% while RYIHX had a year-to-date loss of 7%. If you invested a total of $15,500 and had a total year-to-date loss of $915, how much did you invest in each company?
XYZ anticipates earning $1,000,000 and paying $200,000 in dividends this year. XYZ's capital structure is 20% debt and 80% equity and its tax rate is 35%. Compute the equity breakpoint to the nearest dollar. Your Answer:
The Paulson Company's year-end balance sheet is shown below. Its cost of common equity is 15%, its before-tax cost of debt is 8%, and its marginal tax rate is 25%. Assume that the firm's long-term debt sells at par value. The firm's total debt, which is the sum of the company's short-term debt and long-term debt, equals $1,201. The firm has 576 shares of common stock outstanding that sell for $4.00 per share. Assets Liabilities And Equity Cash $ 120 Accounts payable and accruals $ 10 Accounts receivable 240 Short-term debt 51 Inventories 360 Long-term debt 1,150 Plant and equipment, net 2,160 Common equity 1,669 Total assets $2,880 Total liabilities and equity $2,880 Calculate Paulson's WACC using market-value weights. Do not round intermediate calculations. Round your answer to two decimal places. %
If a security offers a dividend amounting to P 5.23/ share and an investor purchased 200 shares at P 77.50/share, what is his Total Investment Return at the end of the year if the share price increased by 8%? Based on the given above, compute for the Dividend Yield Rate, Capital Gains Rate, and Total Investment Return Rate.
A company has net earnings of AED 10,000 for the current vear and suppose the company maintai the same earnings for the next year. The company has 1,000 total outstanding shares during the current year. The company decides to buyback 40% of its shares in the following year. Show how this decision will impact the company's earnings per share?
The Everest Corporation has $6 million in Sales, its ROE is 12%, and its total asset turnover is 3.2. The firm is 50% equity financed. Calculate the firm’s net income.
b. ABC Inc. finances its operations with 40 percent debt and 60 percent equity. Its net income is $30 million and it has a dividend payout ratio of 30%. Its capital budget is B = $100 million this year. The annual yield on the company's debt is 7% and the company's tax rate is T = 30%. The company's common stock trades at Po = $100 per share, and its current dividend of Do = $4 per share is expected to grow at a constant rate of g = 5% a year. The floatation cost of external equity, if issued, is F = 1.5% of the dollar amount issued. What is the company's weighted average cost of capital?
Mullineaux Corporation has a target capital structure of 65 percent common stock and 35 percent debt. Its cost of equity is 10.2 percent, and the cost of debt is 5.6 percent. The relevant tax rate is 21 percent. What is the company’s WACC? Round your answer to the nearest hundredth.
Reese bought Acme, Inc. for $40 per share two years ago. Today, Acme is trading at $72 per share. What is the annualized return for Reese? O 80.00%. O 34.16%. 40.00%. 28.75%
Steph & Sons has a capital structure that consists of 20 percent equity and 80 percent debt. The company expects to report $3 million in net income this year, and 60 percent of the net income will be paid out as dividends. What is the equity structure of the target capital structure?

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