FLAG QUESTION ... Scooter Madness (SM) has 10,000 shares outstanding and is expected to have Net Income of $70,000 in year 1. SM expects to retain 35% of its earnings to invest in projects at the end of year 1. If the expected share price 1 year from toda after any dividend issued is $65 and SM's return on equity capital is 16%, what would you expect the share price to be today? (round to the nearest cent: $x.xx) Answers 1-1

FLAG QUESTION ... Scooter Madness (SM) has 10,000 shares outstanding and is expected to have Net Income of $70,000 in year 1. SM expects to retain 35% of its earnings to invest in projects at the end of year 1. If the expected share price 1 year from toda after any dividend issued is $65 and SM's return on equity capital is 16%, what would you expect the share price to be today? (round to the nearest cent: $x.xx) Answers 1-1

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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Gillette Corporation will pay an annual dividend of $ 0.63 one year from now. Analysts expect this dividend to grow at 1 1.1 % per year thereafter until the 6th year. Thereafter, growth will level off at 1.6 % per year. According to the dividend- discount model, what is the value of a Gillette share if the firm's equity cost of capital is 8.4 %? Question content area bottom Part 1 The value of a Gillette share is $ enter your response here. (Round to the nearest cent.)
i need the answer quickly
Von Bora Corporation (VBC) is expected to pay a $3.50 dividend at the end of this year. If you expect VBC's dividend to grow by 5% per year forever and VBC's equity cost of capital is 11%, then the value of a share of VBS stock is closest to: $23.33 O $58.33 $21.88 $35.00
Assume that a firm can issue preferred stock that has a $70 par value and pays a 15.0% annual dividend each year. The firm's investment bankers believe that investors will be willing to pay $84.00 per share and that flotation costs will be equal to $9.97 per share. Given this information, determine the difference between the investor's required rate of return, and the firm's cost of preferred stock. 2.541% O 2.224% O 1.963% 1.398% 1.683%
3. In one year, Bold Betties Inc. will pay a $3 per share dividend and it is expected to grow by 3 percent per year. If the required return on this stock is 12 percent, what is the current stock price? Hint: Po = Dox(1+g) R-g # 3 E 4. In one year, Bold Betties Inc. will pay a $6 per share dividend and it is expected to grow by 4 percent per year. If the required return on this stock is 10 percent, what is the current stock price? Hint: Po = $ 4 R % 5 F5 T Dox(1+g) R-g * ^ D₁ R-g 6 F6 D₁ R-9 Y * F7 & 7 U PrtScn F8 8 Home F9 9 End F10 0 PgUp F11 P
BB8 Mining has a payout ratio of 30% and is due to pay a dividend of $2.30 next year. The stock is currently trading at $45 and the return on equity (ROE) is 15%. Using the dividend discount model, what is the cost of equity capital for BB8?
Bha
Assume Evco, Inc. has a current stock price of $48.64 and will pay a $2.25 dividend in one year; its equity cost of capital is 10%. What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its current price? We can expect Evco stock to sell for $. (Round to the nearest cent.)
Dreamline expects to earn $20 per share this year and intends to pay out $8 in dividends to shareholders. It is planning to invest in new projects with an expected return on equity of 20%. The future plans of Dreamline involve retaining the same dividend payout ratio. Dreamline expects to earn 20% on its equity .The number of common shares outstanding will remain unchanged. i) Calculate the future growth rate for Dreamline’s earnings. ii) If the required rate of return of for Dreamline’s common stock is 15%, what would be the price of Dreamline’s common stock? iii) Compare the valuation of bonds and preferred stock with that of common stock
Assume Evco, Inc. has a current stock price of $49. 11 and will pay a $2.25 dividend in one year, its equity cost of capital is 18%. What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its current price? We can expect Evco stock to sell for $ ( Round to the nearest cent.)
The Duo Growth Company just paid a dividend of $1.00 per share. The dividend is expected to grow at a rate of 24% per year for the next three years and then to level off to 5% per year forever. You think the appropriate market capitalization rate is 19% per year. a. What is your estimate of the intrinsic value of a share of the stock? (Use intermediate calculations rounded to 4 decimal places. Round your answer to 2 decimal places.) Intrinsic value per share b. If the market price of a share is equal to this intrinsic value, what is the expected dividend yield? (Use intermediate values rounded to 2 decimal places. Round your answer to 2 decimal places.) Expected dividend yield c. What do you expect its price to be one year from now? (Use intermediate values rounded to 4 decimal places. Round your answer to 2 decimal places.) Expected price d-1. What is the implied capital gain? (Use intermediate values rounded to 2 decimal places. Round your answer to 4 decimal places.) Implied Capital…
We are trying to value the technology company B&B's share price. If the appropriate industry PE for this type of company is 5 and you predict net income for B&B to be $3 million for the coming year. Assuming the firm has 1 million shares of common stock. What is the forecasted stock price for a year from now? $3 $10 $8 $15

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