Answered: Problem 3. Three Guards Corporation…

Problem 3. Three Guards Corporation computed the following items from its financial records for the year-Price-Earnings ratio: 12x; Payout ratio: 60%; Asset turnover ratio: 0.90x

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Related questions

Q: You have assigned the following values to these three firms: Upcoming Dividend $0.60 1.54 0.50 Estee…

A: The rate of return that will be required by an investor who has invested in a stock portfolio will…

Q: What is the return on the following investment? Original Cost Selling Price Distributions Percent…

A: In this question, we are required to determine the percent return on the bond.Information given:Cost…

Q: return on equity ratio

A: The ratio refers to the relation between two financial values which shows the comparison between…

Q: The constant growth dividend discount model (DDM) may be written as fo=D₁/(P₁ + 8) Po=D₁/(r₁-8) P =…

A: Dividend Discount model is used for calculation of current market price per share based on future…

Q: Spot price Net payoff 8 -0.48 9 -0.48 10 -0.48 11 -0.48 12 -0.48 13 0.52 14 0.52 15 0.52 1.…

A: Breakeven Point = Spot Price + Net Premium paid on options

Q: Estimate its cost of common equity, Maxell and Associcates recently hired you. Obtain the following…

A: The question is based on the calculation of share value based on the constant growth dividend…

Q: h. Calculate the total return % in each of the following instances: a. Do = $2.00, dividend growth =…

A: Answer Return ={ (Dividend + Capital gain ) / P0}×100

Q: A В 1 Equity A Weighted Weighted Squared State of Rate of Squared Deviation Probability Rate of…

A: expected return is the amount of profit an investor can expect receiving on an investement.

Q: The dividend discount model constant growth It is a method of evaluating dividends that assumes a…

A: Dividend discount models compute the present value of future cash flows (dividends) for evaluating…

Q: What is XYZ's estimated cost of common equity using the CAPM approach? Beta 1.2 rRF 7% RPm 6%…

A: We need to compute the Estimated cost of common equity for XYZ using CAPM approach.

Q: If Net Worth = 14, the Market Value of Assets = 250 with duration of 8.0, the Market Value of…

A: Duration of Assets =(Net Worth/Total Assets*Duration of Equity) + (liabilities/Total Worth*Duration…

Q: 9. a. Div Yield % = 6%, Total Return % = 16%, Po = $10 b. Capital Gain% = 8%, Div Yield % = 5%, D1 =…

A: Given, Dividend Yield = 6% Total Return = 16% Po = $10 Capital Gain = 8% Dividend Yield =5% D1 = $3…

Q: The dividend discount model constant growth It is a method of evaluating dividends that assumes a…

A: Dividend discount model = Expected dividend / (cost of equity - growth rate)

Q: What is XYZ's estimated cost of common equity using the CAPM approach? Beta 1.2 rRF 7% RPm 6%…

A: We require to calculate the XYZ's cost of common equity using CAPM approach in this question from…

Q: calculate Black & Decker predicted payout ratio and dividend yield controlling for differences in…

A: The question is based on the concept of calculation of predicted payout ratio and predicted dividend…

Q: What are two ways you can calculate the cost of equity? Select all that apply, then click Submit…

A: The cost of equity can be calculated with following methods:Dividend growth model approach:Ke = (D1…

Q: Based on the information above, the capital gains yield for the coming year is closest to A. 9.08%.…

A: The required return on a stock consists of the dividend yield and capital gains yield. The capital…

Q: Financial Plan Components Cost Weights Weighted Cost A Debt 7.15% ? ? A Equity 5.15%…

A: WACC = We*Ke+Wd*Kd W is weight K is cost e is equity and d is debt

Q: A company has a Return on Equity of 0.23, a Profit Margin of 0.1 and Total Asset Turnover of 0.4.…

A: As per Dupont Analysis, Return on equity = Net Profit Margin * Asset Turnover ratio * Equity…

Q: Which of the following breakeven points requires the minimum quantity of production? O gross profit…

A: Break-even quantity is the number of units to be produced to recover the expenses incrred. Now, this…

Q: you have been provided with the following data D1=$1.27 PO=60 and G=8 constant. What is the cost of…

A: Discounted cash flow (DCF) refers to a valuation method that estimates the value of an investment…

Q: The formula of which of the following considers the percentage change in price? a. Total expected…

A: Percentage change in price Percentage change in price involves two prices of two different periods.…

Q: Do= $0.80, P0= $22.50, gl= 8% continous. Based on the dividen growth model . What is the percent of…

A: (Current dividend)D0=0.80 Current stock price (P0)=22.50 Growth rate (g)=8%

Q: provide a 2 unique problem with own solution in YIELD performance ratio with explanation. Use this…

A: Dividend Yield is calculated by dividing Dividend per share by Market Price per share. It is…

Q: What is the estimated cost of common equity using the DCF approach given the data below? Price $50…

A: In the given question we need to compute the estimated cost of common equity.

Q: 1 percent = Rf 6 percent = MRP 1.4 Beta Rf + MRP * Beta what is cost of equity

A: Given the following values:Risk-Free Rate (Rf) = 1% (0.01 in decimal form)Market Risk Premium (MRP)…

Q: Find the unknowns: Consider the following data: Division K Income P140,000 ? Revenue ? P3,000,000…

A: The question is based on the concept of Accounting Ratios.

Q: You have the following data: D1 = $1.80; PO = $36.00; and g = 3.00% (constant).

A: Dividend discount model:The Dividend Discount Model (DDM) remains the dominant method in equity…

Q: Use the DuPont system and the following data to find return on equity. (Do not roun intermediate…

A: A measure of a company's profitability called return on equity (ROE) compares the net profit that it…

Q: Consider the following premerger information about a bidding firm (Firm B) and a target firm (Firm…

A: ParticularsFirm BFirm TNumber of shares5,4001,300Stock price$53.00$23.00Synergy benefits from…

Q: Question:- based on this figure: • Analyze the relationship between share price and D/E ratio •…

A: Answer:- Analysis of the relationship between share price and D/E ratio:- Stock prices are…

Q: What is XYZ's estimated cost of common equity using the CAPM approach? B =1.2 TRF = 7% RPM = 6% %3D

A: We need to find XYZ's cost of common equity in this question using CAPM approach. As per CAPM : Cost…

Q: Book value per share is ____ oriented while market value per share is ____oriented. * short term;…

A: The book value(BV) per share is derived by dividing the common capital with those shares of common…

Q: d. Dividends per share of common stock e. Dividend yield Feedback 624

A: Ratio analysis means where different ratio of various years of years companies has been compared and…

Q: T PROBLEM 3.5B The Accounting rup Cycle: Journalizing, Dr. Cravati, 1DMD., opened a dental clinic on…

A: Since we only answer up to 3 sub-parts, we’ll answer the first 3. Please resubmit the question and…

Q: Suppose TRF = 5%, M = 12%, and b;= 0.75, what is the cost of equity? 5.00% 10.25% 12.00% 6.00%

A: CAPM refers to the model that uses the risk factor and the returns prevalent in the market to…

Q: stion 26 Consider the following data: D₁-$1.55: Po-$49.50. g-3.70% (constant); and F-2.00% What is…

A: The cost of equity can be defined as the return required by the equity shareholders. Equity…

Q: consider the following data RF= 4.15% RPM = 5.35% and B= .85 based on the CAPM approach what is the…

A: CAPME(ri) = Rf + Bi * (E(Rm) - Rf)E(ri) = Expected returnRf = Risk free rateBi = BetaE(Rm) =…

Q: True or False, pls explain why 13) A stable peso dividend policy tries to maintain a relatively…

A: Ans TRUE

Q: how do we calculate dividend when there is eps retention ratio and dps retention ratio?

A: The dividend payment to the shareholders based on the company's earnings and its dividend payout…

Q: What are three ways to estimate the expected dividend growthrate?

A: Expected Dividend growth rate is the prospective growth expected by investors on the dividend paid…

Q: Explain the graph using examples.

A: A long position in call option provides its holder the right to purchase the option at the…

Question

What is the dividend yield?

a. 5.0%

b. 7.5%

c. 7.2%

d. 10.8%

Problem 3. Three Guards Corporation computed the following items from its financial records for
the year-Price-Earnings ratio: 12x; Payout ratio: 60%; Asset turnover ratio: 0.90x

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step by step

Solved in 2 steps

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.

Similar questions

QUESTION 11 Which of the following factors comprise the CAPM? I. dividend yield II. risk-free rate of return III. the expected rate of return on the market IV. risk premium for the firm I and III only II and IV only III and IV only II, III and IV only
M3
Explain how to estimate the price per share using the free cashflow valuation model.
If a bank has a leverage ratio of 0.5 and a return on assets of 1%, what is its return on equity? Select one: OA 0.2% O B. 2% OC 5% O D. 20%
h. Calculate the total return % in each of the following instances: a. Do = $2.00, dividend growth = 4%, Po = $50, P: = $60 b. Po = $32, Dividend yield % = 5%, P1 = $30 c. Dividend Yield = 4%; Capital Gain = %3D $20; DI = $4
Kk.163.
calculate the firms: d) P/E ratio given the market price above e) ROE, f) Debt-equity ratio g) Times Interest Earned Ratio, if interest and tax are 15% and 30% of sales respectively.
Dividend policy may be affected by firm level as well as macroeconomic level factors. Select FIVE variables (at least 2 firm-level factors/variables and at least 2 macroeconomic factors/variables) from the list shown below. Explain and discuss the predicted impact of selected factors on dividend policy using relevant theories. i.e. what theories help to predict the positive or negative impact on the dividend payout and why. FIRM-LEVEL FACTOR/VARIABLE Asset growth rate Positive NPV investment opportunities Capital intensity of the production process Free cash flow generated Number of individual shareholders Relative tightness of ownership coalition Size of largest block holder MACROECONOMIC FACTOR/VARIABLE Transaction costs of security issuance Personal tax rates on dividend income Personal tax rates on capital gain Importance of institutional investors Corporate governance power of institutional investors Capital market, relative to intermediated (bank) financing
QUESTION 6 A company has a Return on Equity of 0.2, a Profit Margin of 0.12 and Total Asset Turnover of 0.48. Using this information calculate the Equity Multiplier?
QUESTION 13 The most common practice is a variation of the: O a. residual theory of dividends O b. constant dividend payout ratio Oc. stable dividend policy O d. low dividend plus extra policy
Company has return on assets 12.4% and debt-equity ratio is 0.25. What is ROE? Select one: a.35.43% b.9.18% c.9.3% d.15.5%
4