Halliford Corporation expects to have earnings this coming year of $2.879 per share. Halliford plans to retain all of its earnings for the next two years. Then, for the subsequent two years, the firm will retain 48% of its earnings. It will retain 18% of its earnings from that point onward. Each year, retained earnings will be invested in new projects with an expected return of 22.9% per year. Any earnings that are not retained will be paid out as dividends. Assume Halliford's share count remains constant and all earnings growth comes from the investment of retained earnings. If Halliford's equity cost of capital is 9.7%, what price would you estimate for Halliford stock? The stock price will be $. (Round to the nearest cent.)

Halliford Corporation expects to have earnings this coming year of $2.879 per share. Halliford plans to retain all of its earnings for the next two years. Then, for the subsequent two years, the firm will retain 48% of its earnings. It will retain 18% of its earnings from that point onward. Each year, retained earnings will be invested in new projects with an expected return of 22.9% per year. Any earnings that are not retained will be paid out as dividends. Assume Halliford's share count remains constant and all earnings growth comes from the investment of retained earnings. If Halliford's equity cost of capital is 9.7%, what price would you estimate for Halliford stock? The stock price will be $. (Round to the nearest cent.)

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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Derry Corporation is expected to have an EBIT of $3,100,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $245,000, $150,000, and $250,000, respectively. All are expected to grow at 15 percent per year for four years. The company currently has $19,500,000 in debt and 860,000 shares outstanding. At Year 5, you believe that the company's sales will be $28,700,000 and the appropriate price-sales ratio is 3.4. The company's WACC is 9.7 percent and the tax rate is 23 percent. What is the price per share of the company's stock? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Share price
Microsoft Co. places 150,000 in an investment that has a return of 8%. The investment is placed there for 12 years, and then at the end of 12th year, annual withdrawals begin and continue for 6 years. What is the annual amount that may be withdrawn during the 6-year period?
Halliford Corporation expects to have earnings this coming year of $3.104 per share. Halliford plans to retain all of its earnings for the next two years. Then, for the subsequent two years, the firm will retain 47% of its earnings. It will retain 23% of its earnings from that point onward. Each year, retained earnings will be invested in new projects with an expected return of 21.5% per year. Any earnings that are not retained will be paid out as dividends. Assume Halliford's share count remains constant and all earnings growth comes from the investment of retained earnings. If Halliford's equity cost of capital is 8.6%, what price would you estimate for Halliford stock? The stock price will be $ (Round to the nearest cent.)
Berea Resources is planning a$75million capital expenditure program for the coming vear. Next year, Berea expects to report to the IR5 earnings of s40 milion after interest and tanes The company presently has 22 milion shares of commoo stock issued and outstanding. Dividend payments are expected to increase from the present level of s8 millon co 512 manion, The company expects its current asset needs to increase from a current level of$22millon to$27malion, Current liabilibes, exduding short-tern bank berrowirgs, are expected to incease from$13million to$18milion. Interest payments are s5 milion next year, and long-term debt retiremert obligations are$6million next year. Deoreciation next year is expectad to be$16million on the company's financial statements, but the company will report depreciation of$19million for tax purposes. How much extemal financing is required by Berea for the coming yean? Enter your answer in malions. For example, an answer of tt milion should be enternd as 1,…
For the year ending December 31, 2017, sales for Company Y were $78.51 billion. Beginning January 1, 2018 Company Y plans to invest 7.5% of their sales amount each year and they expect their sales to increase by 4% each year over the next three years. Company Y invests into an account earning an APR of 2.0% compounded continuously. Assume a continuous income stream. How much money will be in the investment account on December 31, 2020? Round your answer to three decimal places. 84.762 X billion dollars How much money did Company Y invest in the account between January 1, 2018 and December 31, 2020? Round your answer to three decimal places. billion dollars How much interest did Company Y earn on this investment between January 1, 2018 and December 31, 2020? Round your answer to three decimal places. If intermediate values are used, be sure to use the unrounded values to determine the answer. billion dollars Submit Answer
Matt’s Manufacturing, Inc. expects to earn $45 million per year in perpetuity if it does not undertake any new projects. However, the firm has an investment opportunity that will generate annual earnings of $10 million in perpetuity, beginning two years from today. This investment has an initial (upfront) cost of $10 million today and $5 million next year. The firm has 10 million shares of common stock outstanding, and the required rate of return on the stock is 10% percent. What is the stock price per share if the firm undertakes the investment?
Rearden Metals expects to have earnings this coming year of $2.50 per share. Rearden plans to retain all of its earnings for the next year. For the subsequent three years, the firm will retain 50% of its earnings. It will then retain 25% of its earnings from that point onward. Each year, retained earnings will be invested in new projects with an expected return of 25% per year. Any earnings that are not retained will be paid out as dividends. Assume Rearden's shares outstanding remains constant and all earnings growth comes from the investment of retained earnings. If Rearden's equity cost of capital is 8%, then what is Rearden's stock price?
The optical products division of Panasonic is planning a $3.5 million building expansion for manufacturing its powerful Lumix DMC digital zoom camera. If the company uses an interest rate of 20% per year compounded quarterly for all new investments, what is the uniform amount of revenue per quarter the company must realize to recover its investment in 3 years?
Appalachian Registers, Inc. (ARI) has current sales of $50 million. Sales are expected to grow to $75 million next year. ARI currently has accounts receivable of $11 million, inventories of $15 million, and net fixed assets of $17 million. These assets are expected to grow at the same rate as sales over the next year. Accounts payable are expected to increase from their current level of $15 million to a new level of $20 million next year. ARI wants to increase its cash balance at the end of next year by $3 million over its current cash balances, which average $4 million. Earnings after taxes next year are forecasted to be $10 million. Next year, ARI plans to pay dividends of $1 million, up from $500,000 this year. ARI’s marginal tax rate is 34 percent. How much external financing is required by ARI next year? Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places. $ _____ million ?
An oil well is estimated to yield returns of $12,000 monthly (end of month) for eleven years. To develop the well, it is estimated that a company will have to spend $600,000 today, $250,000 in three years and $5,000 (for maintenance) at the beginning of the month for 6 years BUT starting in 3 years from today. If the company’s cost of capital (interest rate) is 14% compounded annually, what is the Net Present Value of this potential project?
Steber Packaging Inc. expects sales next year of $51 million. Of this total, 25 percent is expected to be for cash and the balance will be on credit, payable in 30 days. Operating expenses are expected to total $26 million. Accelerated depreciation is expected to total $10 million, although the company will only report $6 million of depreciation on its public financial reports. The marginal tax rate for Steber is 34 percent. Current assets now total $25 million and current liabilities total $16 million. Current assets are expected to increase to $29 million over the coming year. Current liabilities are expected to increase to $22 million. Compute the projected after-tax operating cash flow for Steber during the coming year. Enter your answer in millions. For example, an answer of $1.2 million should be entered as 1.2, not 1,200,000. Round your answer to two decimal places.
Derry Corporation is expected to have an EBIT of $2,550,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $190,000, $95,000, and $195,000, respectively. All are expected to grow at 16 percent per year for four years. The company currently has $14,000,000 in debt and 805,000 shares outstanding. At Year 5, you believe that the company's sales will be $27,600,000 and the appropriate price-sales ratio is 2.2. The company's WACC is 8.5 percent and the tax rate is 22 percent. What is the price per share of the company's stock? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Share price

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