Valence Electronics has 229 million shares outstanding. It expects earnings at the end of the year of $770 million. Valence pays out 40% of its earnings in total - 15% paid out as dividends and 25% used to repurchase shares If Valence's earnings are expected to grow by 7% per year, these payout rates do not change, and Valence's equity cost of capital is 9%, what is Valence's share price? OA. $53.80 OB. $10.09 OC. $67.25 OD. $20 18 m

Valence Electronics has 229 million shares outstanding. It expects earnings at the end of the year of $770 million. Valence pays out 40% of its earnings in total - 15% paid out as dividends and 25% used to repurchase shares If Valence's earnings are expected to grow by 7% per year, these payout rates do not change, and Valence's equity cost of capital is 9%, what is Valence's share price? OA. $53.80 OB. $10.09 OC. $67.25 OD. $20 18 m

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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Zoom Enterprises expects that one year from now it will pay a total dividend of $4.5 million and repurchase $4.5 million worth of shares. It plans to spend $9.0 million on dividends and repurchases every year after that forever, although it may not always be an even split between dividends and repurchases. If Zoom's equity cost of capital is 13.5% and it has 4.9 million shares outstanding, what is its share price today?
ABC Inc. is expected to pay a $2.50 dividend at year end (D1 = $2.50), the dividend is expected to grow at a constant rate of 5.50% a year, and the common stock currently sells for $52.50 a share. The before-tax cost of debt is 7.50% and the tax rate is 40%. The target capital structure consist of debt and 55% common equity. What is the companys WACC if all the equity used is from retained earnings?
ABC Corporation paid $5 dividends per share last year. Dividends will grow by 10% and then 8% in the first two years. Its growth rate will be 5% on the third year and onwards. If EFG Corporation requires a minimum return on 15% on its investment in ABC shares, how would EFG currently value a share of ABC Corporation?
company presently pays no dividend. You anticipate company will pay an annual dividend of $1.00 per share two years from today and you expect dividends to grow by 3% per year thereafter. If company’s equity cost of capital is 14%, then what is a fair value for a share of company today? Enter answer rounded to the nearest cent.
Zoom Enterprises expects that one year from now it will pay a total dividend of $4.9 million and repurchase $4.9 million worth of shares It plans to spend $9.8 million on dividends and repurchases every year after that forever, although it may not always be an even split between dividends and repurchases If Zoom's equity cost of capital is 12 5% and it has 5 4 million shares outstanding, what is its share price today? The price per share is $ (Round to the nearest cent)
XYZ Shoes Inc pays dividends annually and has an active share repurchase program. XYZ makes all of its payouts at the end of each year and its year-end was yesterday. Today, XYZ's share price is P34.33 and there are 100 million shares outstanding. Shareholders require a return of 9% and analysts expect XYZ's payouts to grow in perpetuity at an annual rate of 3%. What are next year's total payouts?
Time Warner shares have a market capitalization of $55 billion. The company just paid a dividend of $0.35 per share and each share trades for $35. The growth rate in dividends is expected to be 6.5% per year. Also, Time Warner has $20 billion of debt that trades with a yield to maturity of 7%. If the firm's tax rate is 30%, compute the WACC?
Arts and Crafts, Inc., will pay a dividend of $ 3.97 per share in 1 year. It sells at $ 90.00 a share, and has an expected return of 14.24 percent. What must be the expected growth rate of the company's dividends?
Scarab Technologies is expected to generate $175 million in free cash flow next year, and FCF is expected to grow at a constant rate of 7% per year indefinitely. Scarab has no debt or preferred stock, and its WACC is 10%. If Scarab has 45 million shares of stock outstanding, what is the stock's value per share? Do not round intermediate calculations. Round your answer to the nearest cent. How much is each share of common stock is worth dollars, according to the corporate valuation model?
NHL Inc.’s current return on equity (ROE) is 20%, its current book equity per share is $50, and it pays out half of its earnings as dividends. Both the ROE and payout ratio will stay constant for the next two years. After year 2, competition will force ROE down to 8%, and NHL will increase its payout ratio to 75%. The cost of capital is 10%. What is NHL’s stock price today?
NoGrowth Corporation currently pays a dividend of $1.72 per year, and it will continue to pay this dividend forever. What is the price per share if its equity cost of capital is 12% per year?
K AFW Industries has 189 million shares outstanding and expects earnings at the end of this year of $729 million. AFW plans to pay out 58% of its earnings in total, paying 36% as a dividend and using 22% to repurchase shares. If AFW's earnings are expected to grow by 7.2% per year and these payout rates remain constant, determine AFW's share price assuming an equity cost of capital of 11.4%. ECCORD The price per share will be $. (Round to the nearest cent.) his efu

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