Provide correct answer general Accounting question Madison Corp. has reported current net income of $4.5 million. Thecompany has 450,000 shares of common stock outstanding, trading at$42 per share. Management projects that next year's net income willbe $6.8 million, and they plan to issue an additional 90,000 shares,bringing the total to 540,000 shares. Assuming the P/E ratio remainsconstant, what will be the projected stock price next year?

Step 1: Definitions:EPS (Earnings Per Share): Profit per share, calculated as Net Income ÷ Total…

Answered: Madison Corp. has reported current net…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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An investor estimates that next year’s sales for Dursley’s Hotels, Inc. should amount to about $100 million. The company has five million shares outstanding, generates a net profit margin of about 10%, and has a payout ratio of 50%. All figures are expected to hold for next year. Given this information, compute the following. .Estimated net earnings for next year Next year’s dividends per share The expected price of the stock (assuming the P/E ratio is 24.5 times earnings)
Boehm Incorporated is expected to pay a $2.20 per share dividend at the end of this year (i.e., D1 = $2.20). The dividend is expected to grow at a constant rate of 7% a year. The required rate of return on the stock, rs, is 17%. What is the estimated value per share of Boehm's stock? Do not round intermediate calculations. Round your answer to the nearest cent.
During the next 12 months, Crown, Inc. plans to pay dividends of $1.20 per share. Currently, its stock price is $30 per share. Growth is expected at 9 percent. Flotation costs are $2. Compute the cost of retained earnings. and if Crown, Inc. has a beta of 1.2. The market return equals 14 percent and the risk‑free rate of return equals 6 percent. What is the estimated cost of common stock equity?
The stock price of Fujita Company is $53.30. Investors require a return of 15 percent on similar stocks. If the company plans to pay a dividend of $3.30 next year, what growth rate is expected for the company’s stock price?
Analysts expect Costco stock to pay a dividend of $3.70 in 1 year and is expected to sell for $374.41 at that time. If the required return is 5.0%, what is the value of the stock?
The stock price of Alps Co. is $53.90. Investors require a return of 13 percent on similar stocks. If the company plans to pay a dividend of $3.60 next year, what growth rate is expected for the company's stock price?
The stock price of Fujita Company is $62. Investors require a return of 10.1 percent on similar stocks. If the company plans to pay a dividend of $4.05 next year, what growth rate is expected for the company's stock price? Can someone explain how to do this with a financial calculator?
CanPro Co. is expecting that its dividend for this coming year will be $1.2 a share and that all future dividends are expected to increase by 3 percent annually. What is the required return of this stock if the current market price of the stock is $17?
Problem? ? Accounting question
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.
The stock of Nogro Corporation is currently selling for $29 per share. Earnings per share in the coming year are expected to be $3.90. The company has a policy of paying out 50% of its earnings each year in dividends. The rest is retained and invested in projects that earn a 21% rate of return per year. This situation is expected to continue indefinitely. a. Assuming the current market price of the stock reflects its intrinsic value as computed using the constant-growth DDM, what rate of return do Nogro's investors require (round to 2 decimal places)? Rate of Return ?% b. By how much does its value exceed what it would be if all earnings were paid as dividends and nothing were reinvested (round to 2 decimal places)? PVGO $?
The stock of Alpha Tool sells for $81.20 per share. Its current dividend rate, D0, is $3 per share. Analysts and investors expect Alpha to increase its dividends at a 20 percent rate for each of the next 2 years. This annual dividend growth rate is expected to decline to 17 percent for years 3 and 4 and then to settle down to 13 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. %

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