You are considering a new supplier that you estimate would reduce your costs 0.025, increasing overall EBIT margin the same amount, or 250 basis points. Tax burden 0.79 Interest burden 0.8 Operating margin Asset turnover 2.1 Leverage ratio 1.2 Equity 56 Before the changes are made the firm was intrinsically valued at 45.54 After the changes, what would the new value be assuming the new ROE, growth, and EPS The firm pays dividends as 0.61 of EPS. The discount rate is 0.15" O 64.88 O 70.24 O 62.35 O 67.36 0.08 O 73.13
You are considering a new supplier that you estimate would reduce your costs 0.025, increasing overall EBIT margin the same amount, or 250 basis points. Tax burden 0.79 Interest burden 0.8 Operating margin Asset turnover 2.1 Leverage ratio 1.2 Equity 56 Before the changes are made the firm was intrinsically valued at 45.54 After the changes, what would the new value be assuming the new ROE, growth, and EPS The firm pays dividends as 0.61 of EPS. The discount rate is 0.15" O 64.88 O 70.24 O 62.35 O 67.36 0.08 O 73.13
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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Transcribed Image Text:You are considering a new supplier that you estimate would reduce your costs 0.025,
increasing overall EBIT margin the same amount, or 250 basis points.
Tax burden
0.79
Interest burden 0.8
Operating margin
Asset turnover 2.1
Leverage ratio 1.2
Equity 56
Before the changes are made the firm was intrinsically valued at 45.54
After the changes, what would the new value be assuming the new ROE, growth, and EPS1.
The firm pays dividends as 0.61 of EPS. The discount rate is 0.15"
O 64.88
O 70.24
62.35
O 67.36
0.08
O 73.13
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