valuation of QuickChange
Q: a. Given the following holding-period returns, compute the average returns and the standard…
A: a. Formula used:
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Q: a. Given the following holding-period returns, compute the average returns and the standard…
A: Here, MonthS CorpMarket12%1%2-1%2%3-1%2%41%1%56%5%66%1%
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Q: require a return of 18% on similar stocks, how much is the stock worth and is it a good buy?
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A: Last dividend = D0 = $2 Risk free rate (Rf) = 5% Stock with beta 1.5 has return = 11.75% Beta of…
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Q: Return to question The stock of Nogro Corporation is currently selling for $16 per share Earnings…
A: Share price = $16Expected EPS = $4Payout ratio = 40%ROE = 25%
Q: a. Given the following holding-period returns, (Below) compute the average returns and the…
A:
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A: given, EPS1=$5EPS2=$7dividend payout = 0.2PE =8r=10%
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Lawrence McKibben is preparing a valuation of QuickChange Auto Centers, Inc. The FCFE per share for the current year is $0.75. The FCFE is expected to grow at 10 percent for next year, then at 26 percent annually for the following three years, and then at 6 percent in Year 5 and thereafter. QuickChange’s estimated beta is 2.00, and McKibben believes that current market conditions dictate a 4.5 percent risk-free
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- NikulAn analyst believes that inflation is going to increase by 2.0% over the next year, while the market risk premium will be unchanged. The analyst uses the Capital Asset Pricing Model (CAPM). The following graph plots the current SML. Calculate Happy Corp.'s new required return. Then, on the graph, use the green points (rectangle symbols) to plot the new SML suggested by this analyst's prediction. Happy Corp.'s new required rate of return is Tool tip: Mouse over the points on the graph to see their coordinates. REQUIRED RATE OF RETURN (Percent) 1.2 1.6 2.0 0.8 RISK (Beta) New SML ? The SML helps determine the risk-aversion level among investors. The higher the level of risk aversion, the the slope of the SML. Which of the following statements best describes the shape of the SML if investors were not at all risk averse? O The SML would be a horizontal line. O The SML would have a negative slope. O The SML would have a positive slope, but the slope would be steeper than it would be if…daha Itd has a short term investment worth $100 000 which is traded on the stock exchange. the investment will be sold in 90 days, the daily standard deviation of movements in the value of the investmentis $1000. based on general market conditions the most likely outcome is that the investment can be sold for $96 500. with 90% confidence what is the lowest value that daha Itd will be able to sell the investment?
- Banco Tech is an early stage financial technology firm. Earnings this year where $20 per share and are expected to grow at 20% per year for the next three years. Banco does not plan to pay a dividend until three years time, when the payout ratio will be 43%. Dividends are expected to grow at 6% thereafter. The required rate of return is 9%. Calculated intrinsic value.Tin-Tin Waste Management, Inc., is growing rapidly. Dividends are expected to grow at rates of 30 percent, 35 percent, 25 percent, and 18 percent over the next four years. Thereafter, management expects dividends to grow at a constant rate of 7 percent. The stock is currently selling at $46.48, and the required rate of return is 18.0 percent. Compute the dividend for the current year (D0). (Round intermediate calculations and final answer to 2 decimal places Riker Departmental Stores management has forecasted a growth rate of 40 percent for the next two years, followed by growth rates of 25 percent and 20 percent for the following two years. It then expects growth to stabilize at a constant rate of 7.5 percent forever. The firm paid a dividend of $3.46 recently. If the required rate of return is 18 percent, what is the current value of Riker's stock? (Round intermediate calculations and final answer to 2 decimal place You own a company that competes with Old World DVD Company.…The market consensus is that Analog Electronic Corporation has an ROE of 10% and a beta of 2.20. It plans to maintain indefinitely its traditional plowback ratio of 3/5. This year's earnings were $4.4 per share. The annual dividend was just paid. The consensus estimate of the coming year's market return is 15%, and T-bills currently offer a 5% return. Required: a. Find the price at which Analog stock should sell. (Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete and correct. Price $ 8.88 b. Calculate the P/E ratio. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Leading Trailing Answer is not complete. P/E ratio 2.02 c. Calculate the present value of growth opportunities. (Negative amount should be indicated by a minus sign. Do not round intermediate calculations. Round your answer to 2 decimal places.) Answer is complete but not entirely correct. PVGO $ (7.42) d. Suppose your research convinces you…
- Sandhill Departmental Stores management has forecasted a growth rate of 40 percent for the next two years, followed by growth rates of 25 percent and 20 percent for the following two years. It then expects growth to stabilize at a constant rate of 7.5 percent forever. The firm paid a dividend of $3.90 recently. If the required rate of return is 14 percent, what is the current value of Sandhill's stock? (Round all intermediate calculations and final answer to 2 decimal places, e.g. 15.25.) Current value $Type your answer herePortman Industries just paid a dividend of $1.92 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 16.00% over the next year. After the next year, though, Portman’s dividend is expected to grow at a constant rate of 3.20% per year. The risk-free rate (rRFrRF) is 4.00%, the market risk premium (RPMRPM) is 4.80%, and Portman’s beta is 2.00. What is the dividents one year from now? What is the Horizon value? What is the Intrinsic value?The future earnings, dividends, and common stock price of Core-Tech, Inc. are expected to grow 6% per year. Core-Tech's common stock currently sells for $21 per share; its last dividend was $2.00; and it will pay a $2.30 dividend at the end of the current year. If the firms beta is 1.9, the risk free rate is 8%, and the average return on the market is 14%, what is the firms cost of common equity (retained earnings) using the CAPM approach?
- Houston Technology's beta is estimated to be 1.4. The firm's stock is expected to pay a dividend of $5 at the end of this year and is currently selling for $65. The S&P 500 is currently returning 14%. If the firm expects constant growth in the future of 8%, what is the firm's after-tax cost of equity? Assume a tax rate of 40%. (6)Belotti Company just paid a dividend of $1.67 per share to its stockholders. Market analysts believe Belotti Company will grow by 19 percent next year, 13.75 percent the following year, and 13 percent the year after. Then, it is projected that Belotti Company will grow at a constant rate of 4.75 percent per year indefinitely. The current rate of interest on risk-free asset is 2.51 percent and the rate of return on market portfolio is 11.25 percent. Belotti Company’s beta is estimated to be 1.09. What is your estimate of the current market price of Belotti Company’ stock?The stock of Nogro Corporation is currently selling for $28 per share. Earnings per share in the coming year are expected to be $7.00. 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 25% rate of return per year. This situation is expected to continue indefinitely. Required: 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? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. By how much does its value exceed what it would be if all earnings were paid as dividends and nothing were reinvested? Note: Do not round intermediate calculations. Round your answer to 2 decimal places. If Nogro were to cut its dividend payout ratio to 25%, what would happen to its stock price? Note: Round your answer to 2 decimal places. What would happen to its…
