To The Habs (TH) is expected to grow at a 2 percant rate for as long as it is in business Cently the company's commun stack is selling for $25 per share. The most recent dividend paid by TTH was $2.50 per share. If wcommon stock island, TTH will incur fotation costs equal to 90 percent.What is the company's cost of stained camnings Round your answer to two decimal placesWhat is its cost of new onnan euty Round your answer to tes decinar plas

Flotation cost refers to the expenses incurred by a company when it raises external capital, such as…

To The Hats (0) is expected to grow at a 2 percand rate for as long as it is in business Cently the company's commun stack is selling for 125 per share. The most recent dibend paid by TTH wa £2.50 per share if common stock und, TT will ince Ratation costs equal to 90 What is the company's cost of stained comings? Round your answer to two decimal places What at of new onesty od our answer to tes de pla

To The Hats (0) is expected to grow at a 2 percand rate for as long as it is in business Cently the company's commun stack is selling for 125 per share. The most recent dibend paid by TTH wa £2.50 per share if common stock und, TT will ince Ratation costs equal to 90 What is the company's cost of stained comings? Round your answer to two decimal places What at of new onesty od our answer to tes de pla

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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Alpha Moose Transporters has a current stock price of $22.35 per share, and is expected to pay a per-share dividend of $1.36 at the end of next year. The company's earnings and dividends' growth rate are expected to grow at the constant rate of 5.20% into the foreseeable future. If Alpha Moose expects to incur flotation costs of 6.50% of the value of its newly-raised equity funds, then the flotation-adjusted (net) cost of its new common stock (rounded to two decimal places) should be
Antiques R Us is a mature manufacturing fi rm. Thecompany just paid a $10.46 dividend, but management expects to reduce the payoutby 4 percent per year indefi nitely. If you require an 11.5 percent return on thisstock, what will you pay for a share today?
Nnana Ltd currently retains 60% of its earnings which are R6 a share this year. It earns an ROE of 30%. Assuming a required rate of return of 22%, how much would you pay for Nnana Ltd based on the earning multiplier model? a. b. C. R78.92 R79.88 R82.88 d. R70.80
The EPS of a company is Rs 20 and discount rate is 15 percent. Retained earning can be employed to earn a return of 13%. If the dividend payout ratios of 10%, 25%, 60% and 80% are considered, which of these will maximise the value?(Use walter) a. 10 percent b. 25 percent c. 60 percent d. 80 percent
Sun Pharma Company earns Rs 10 per share, is capitalized at a rate of 12 per cent and has a rate of return on investment of 20 per cent. What should be the price per share at 70 per cent dividend pay-out ratio according to Walter and Gordon model respectively ? Is this the optimum pay-out ratio according to Walter Model ? Justify your answer showing relevant calculations. What are the similarities and dissimilarities between Walter and Gordon Model
Growers Inc. has a market capitalization (k) of 14%, and expects earnings next period of $3/share (i.e., in t=1). Growers can earn 15% on new investment (ROE), and plans to plowback 75% of earnings. What is Growers' PVGO? a. $3.94 b. $5.84 c. $10.91
A Vegetable Company has the following results: Net sales sh6,000,000 Net total assets sh4,000,000 Depreciation sh160,000 Net income sh400,000 Long-term debt sh2,000,000 Equity sh1,160,000 Dividends sh160,000 Required: a. Compute the Company’s ROE directly. % b. Using the ROE computed in Part (a) above, what is the expected sustainable growth rate for the Company? % c. Assuming the firm’s net profit margin went to 0.04, what would happen to the Company’s ROE? % d. Using the ROE in Part c, what is the expected sustainable growth rate? % e. Using the ROE in Part c, what is the expected sustainable growth rate if dividends were only sh40,000?
Arts and crafts will pay a divided of $5 per share in 1 year. It sells at $50 a share, and firms in the same industry provide an expected rate of return of 15%. What must be the expected growth rate of the company's dividends?
A company earns Rs. 10 per share at an internal rate of 15%. The firm has a policy of paying 40% of earning as dividends. If the required rate of return is 10%, determine the price of the share under Gorden’s Model.Solve using excel
Consider a company that pays out all its earnings (i.e., the payout ratio = 1 or plowback/retention ratio=0). The required return for the firm is 13%. Compute the intrinsic P/E if its ROE is 15%. Compute the intrinsic P/E if its ROE is 20%. Discuss why your answers to parts (a) and (b) differ or do not differ from one another. Suppose that the company’s ROE is 13%. Compute its intrinsic P/E value. Would the answer to part (d) change if the company retained half of its earnings instead of paying all of them out? Discuss why or why not.
1.A Assume that a Peruvian company, DMB LLC, just reported its earnings this year. The reported revenue was $10 million and the reported cost was $9 million. The discount rate is 8%. Mark ALL the CORRECT statements. For this question, profit = revenue - cost. Hint: Apply the Gordon Formula to the profits of the firm. a) If the profit is expected to be constant, the present value of all the company's future profits is $125 million. b) If the profit is expected to grow 3% annually, the present value of all the company's future profits is $20 million. c) If the profit is expected to grow 4% annually, the present value of all the company's future profits is $25.75 million. d) If the profit is expected to grow 6% annually, the present value of all the company's future profits is $50 million. e) If the profit is expected to grow 10% annually, the present value of all the company's future profits is negative.
Calculate the ROE for a firm if it has a profit margin of 20%, an asset turnover of 2, and an equity multiplier of 1.4. For this calcualtion, if you multiply the numbers as they appear, you do NOT have to convert your final answer and cansimply type it in. So if you were multiplying 10%*1.5*5 = 75, you would simply enter 75 for 75% into BB.

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