None In April 2005, General Motors traded at $28 per share on a book valueof $49 per share. Analysts were estimating that GM would earn 69 centsper share for the year ending December 2005. The firm was paying anannual dividend at the time of $2.00 per share.Calculate the return on common equity (ROCE) that analysts wereforecasting for 2005.

To calculate the return on common equity (ROCE), we use the following formula:From the information…

Answered: In April 2005, General Motors traded at…

Managerial Accounting

15th Edition

ISBN:9781337912020

Author:Carl Warren, Ph.d. Cma William B. Tayler

Publisher:Carl Warren, Ph.d. Cma William B. Tayler

Chapter16: Financial Statement Analysis

Section: Chapter Questions

Problem 2MAD

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Apple Inc. (AAPL) is expected to pay a dividend of $1.59 at the end of the year. AAPL’s dividend payout ratio and return on equity (ROE) are 41.27% and 6.86%, respectively. Other things held constant, what would AAPL’s stock price be if the required rate of return is 6.47%? A. $93.14 B. $84.97 C. $72.26 D. $65.13
In the year 2016, Al-Jazeerah and Company's shares traded at $ 30 per share; this is a 25%the decline from its peak. Forecasted earning per share for 2016 & 2017 were $3.05 & $3.2 . Adividend of $ 0.5 per share was indicated for the fiscal year 2017.(a) Calculate AAA's normal forward P/E and the forward P/E it traded in 2016.Use a required rate of return of 10%. (b) Calculate the intrinsic P/E implied by the analyst' forecasts with the assumption thatthere will be no abnormal earning growth after 2018.(c) Explain why an analyst prefers a leading P/E ratio over a trailing P/E ratio? (d) Explain why a normal forward P/E ratio and a normal trailing P/E ratio always differ by 1.(e) Explain why Interest payment should not be part of cash flow from operations. (f) Explain why might a firm trade at a price to book ratio greater than 1?
See Table 2.5 LOADING... showing financial statement data and stock price data for Mydeco Corp. Suppose Mydeco's costs and expenses had been the same fraction of revenues in 2016-2019 as they were in 2015. What would Mydeco's EPS have been each year in this case? Calculate the new EPS for 2016-2019 below: (Round dollar amounts and number of shares to one decimal place. Round percentage amount and the EPS to two decimal places.)
What should the value of this share be on these accounting question?
A company recently paid a $1.35 dividend. The annual dividend is expected to grow at a 18.5 percent rate. At a current stock price of $40.85, what return are shareholders expecting? (Do not round intermediate calculations. Round your percentage answer to 2 decimal places. (e.g., 32.16))
Pacific Storage expects to have earnings per share of $5.25 in 2005, and $5.65 in 2006. The average price-earnings ratio for General industry is 10X (times). Pacific Storage has traditionally had a P/E ratio 12% higher than the industry, and in 2005 it is expected to be 15% higher than the industry. Calculate the expected price of Pacific's stock price in 2005 and 2006, based on expectations of EPS and P/E ratios.
Heavy Rain Corporation just paid a dividend of $4.33 per share, and the firm is expected to experience constant growth of 2.32% over the foreseeable future. The common stock is currently selling for $58.50 per share. What is Heavy Rain's cost of retained earnings using the Gordon Model (DDM) approach? Round the answers to two decimal places in percentage form
Use the Gordon Growth Model to estimate the cost of the ordinary shares (expressed as a percentage to two decimal places) from the information provided attached.
Ametek Co's last annual dividend was $2.50 per share. its common stock is selling for $36.00 per share. if analysts are projecting 11% growth in earnings and dividends for the foreseeable future, what is Ametek's cost of common equity? a) 7.7% b) 18.7% c) 1.87% d) 11%
Last year, Big W Company reported earnings per share of $2.50 when its stock was selling for$50.00. If its earnings this year increase by 10 percent and the P/E ratio remains constant, whatwill be the price of its stock? Explain.

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