I want to this question answer general Accounting Horizon Technologies wishes to expand its operations. The companycurrently has 4 million shares outstanding and no debt. The stock sells for$48 per share, with a book value per share of $12. The current net incomeis $3.2 million. The proposed expansion project will cost $36 million andis expected to increase net income by $600,000. Assume a constant price-earnings ratio.Calculate the new stock price.

Step 1: Define Stock Price Calculation with ExpansionWhen a company expands by issuing new shares,…

Answered: Horizon Technologies wishes to expand…

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

Eakins Inc.’s common stock currently sells for $22.50 per share, the company expects to earn $2.75 per share during the current year, its expected payout ratio is 70%, and its expected constant growth rate is 6.00%. New stock can be sold to the public at the current price, but a flotation cost of 8% would be incurred. By how much would the cost of new stock exceed the cost of retained earnings? Do not round your intermediate calculations.
Eakins Inc.'s common stock currently sells for $15.00 per share, the company expects to earn $2.75 per share during the current year, its expected payout ratio is 70%, and its expected constant growth rate is 6.00%. New stock can be sold to the public at the current price, but a flotation cost of 8% would be incurred. By how much would the cost of new stock exceed the cost of retained earnings? Do not round your intermediate calculations. a. 0.67% О b. 1.12% O c. 0.78% O d. 1.45% O e. 0.89%
Eakins Inc.’s common stock currently sells for $50.00 per share, the company expects to earn $2.75 per share during the current year, its expected payout ratio is 70%, and its expected constant growth rate is 6.00%. New stock can be sold to the public at the current price, but a flotation cost of 8% would be incurred. By how much would the cost of new stock exceed the cost of retained earnings?
Weaver Chocolate Co. expects to earn $4.00 per share during the current year, its expected dividend payout ratio is 70%, its expected constant dividend growth rate is 6.0%, and its common stock currently sells for $45.00 per share. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of equity from new common stock? Do not round your intermediate calculations. O a. 11.93% O b. 15.36% O c. 12.55% O d. 12.22% O e. 12.94%
The current share price of Victoria Plc. is $49. The company has just paid a dividend of $2.5 per share. Dividends are expected to rise by 5 percent per year indefinitely. The company is in a higher systematic risk class than the average share.a. Calculate the intrinsic value of one share of Victoria Plc. if the required rate of return is 15 percent.b. What is the cost of equity capital of Victoria Plc.?
A company’s common stock currently sells for $56.00 per share. The growth rate is a constant 6%, and the company has an expected dividend yield of 7%. The expected long run dividend payout ratio is 20%, and the expected return on equity (ROE) is 7.5%. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of new equity?
What is the cost of equity on these financial accounting question?
The stock of Alpha Tool sells for $70.20 per share. Its current dividend rate, D0, is $2 per share. Analysts and investors expect Alpha to increase its dividends at a 30 percent rate for each of the next 2 years. This annual dividend growth rate is expected to decline to 26 percent for years 3 and 4 and then to settle down to 24 percent per year forever. Calculate the cost of internal equity for Alpha Tool. Use Table II for your calculations. Round your answer to the nearest whole number. %
Management wants to evaluate the projected share price for Froggy Toy Frogs, Inc. based on the projected future cash flows of the company. These cash flows are outlined below. The company anticipates a 6% growth rate per year after the 5th year, and has a weighted average cost of capital of 10%. The company has no excess cash, debt of $200 million, and 25 million shares outstanding. Use the discounted free cash flow model to determine the share price for Froggy Toy Frogs, Inc. Year 1 2 3 4 5 Free Cash Flow(Millions) 52 59 65 70 82 Using this information:• What is the terminal enterprise value of the company?• Using the terminal enterprise value, what is the current, present value of the company?
XYZ company's common shares are selling for P30.00 per share, and the company expects to set its next annual dividend at P1.50 per share. All future dividends are expected to grow by 6% per year, indefinitely. In addition, XYZ faces a floatation cost of 20% on new equity issues. What is the floatation-adjusted cost of equity? Express your answer in percentage.
The stock of Pills Berry Company is currently selling at $60 per share. The firm pays a dividend of $2.25 per share. a. What is the annual dividend yield? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Dividend yield b. If the firm has a payout rate of 50 percent, what is the firm's P/E ratio? (Do not round intermediate calculations and round your answer to 2 decimal places.) P/E ratio times < Prev 5 of 10 Next SERIES
What is the required return on these financial accounting question?

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