You are valuing a bank. The bank currently has assets of $305 per share. Five years from now (that is, at the end of five years), you expect their assets per share to be $455. After Year 5, you expect their assets per share to grow at 3.75 percent per year forever. The bank has an ROA of 2.0 percent and an ROE of 11.5 percent. The bank's cost of equity is 10.5 percent. What is the value of the bank's stock? Use the free cash flow to equity model to value this stock. Do not round intermediate calculations. Round your answer to the nearest cent. #2)

You are valuing a bank. The bank currently has assets of $305 per share. Five years from now (that is, at the end of five years), you expect their assets per share to be $455. After Year 5, you expect their assets per share to grow at 3.75 percent per year forever. The bank has an ROA of 2.0 percent and an ROE of 11.5 percent. The bank's cost of equity is 10.5 percent. What is the value of the bank's stock? Use the free cash flow to equity model to value this stock. Do not round intermediate calculations. Round your answer to the nearest cent. #2)

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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In the example below, we will use year-end assets. Bank A receives $70 in deposits at 5% and, together with 40 in equity, makes a loan of $90 at 7%. The remaining of assets is G-Bond. We will ignore taxes for the moment. NIM=Profit/Interest revenue Bank A Loan 7% $90 G-Bond 5% ? Deposits 5% $70 Equity $40 Total Assets $? Total Equity and Deposit $110 The amount of G-bond is $50 $70 $20 $40 $80 $60 $30 $10
19, Suppose starting this year you decide to make deposits of $5,000 at the end of each year for the next five years in a bank account paying 10% interest. If you currently have $3,000 in the account how much will you have at the end of five years? 1. $25,255.05 2. $36,742.22 3. $35,357.03 4. $30,272.35 5. $28,500.60
Your bank pays 4.1% interest annually. You have $2,700 invested in the bank. How long will it take for your funds to double? Group of answer choices 15.53 13.97 17.25 14.73 18.12
If an investor intends to double $35,000 by investing in a bank that pays 6% interest per year, determine the time it would take to double the investment.
3. Suppose that you have a savings plan that pays 2.5% compounded monthly. You make payments of $75 at the end of each month for 15 years, and then you make monthly payments of $110 for an additional 6 years. a) What is the value of the account at the end of 21 years? b) How much did you earn in interest during those 21 years? 4. Three years after buying 200 shares of XYZ stock for $25 per share, you sell the stock for $8,500. Find the total and annual return.
ok Gladys Bank and Trust has $440 million in consumer loans with an average interest rate of 8.05 percent. The bank also has $320 million in home equity loans with an average interest rate of 5 percent. Finally, the company owns $140 million in government securities with an average rate of 3 percent. Managers at Gladys Bank and Trust estimate that next year its consumer loan portfolio will fall to $400 million and the interest rate will increase to 9.55 percent. They also estimate that its home equity loans will increase to $360 million with an average interest rate of 7 percent, and its government securities portfolio will increase to $155 million with an average rate of 14.50 percent. Required: Estimate the revenues for the coming year for Gladys Bank and Trust. Note: Enter your answer in thousands of dollars. Interest revenue CARRER
My bank is offering a savings plan as follows: The initial yield is 3.25% APY. If I maintain my account for at least 6 months, the yield increases to a 3.75% APY. I plan to start my account with a $2,500 initial deposit and then make regular deposits of $560 per quarter. What is my account balance in 11 months? $4,285 $3,635 $4,206 $4,215
In the example below, we will use year-end assets. Bank A receives $70 in deposits at 5% and, together with 40 in equity, makes a loan of $90 at 7%. The remaining of assets is G-Bond. We will ignore taxes for the moment. Bank A Cash Reserves for Deposit ? Loan 7% $90 G-Bond 5% ? Deposits 5% $70 Equity $40 Total Assets $? Total Equity and Deposit $110 If Cash Reserves for deposit is at least 8% of the deposit under the Basel Accord, how much of the G-Bond Bank A should purchase? $17 $14 $16 $18 $20 $15 $19 $21
How do i calculate this corporate finance problem without using excel? You will be paying off a mortgage of $100,000 over the next 25 years. You have signeda loan agreement with the Toronto Dominion Bank to secure a rate of 15.4%, however youare planning to re-negotiate the loan at the end of 10 years, how much will your payments be over the first 10 years? What is the amount of principal that you paid off with the first payment?
Suppose you borrow $1,000,000 when financing a coffee shop which is valued at $1,300,000. You expect to generate a cash flow of $1,400,000 at the end of the year. The cost of debt is 5.5%. What is the cost of equity? Note: Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05
You are thinking of investing in Nikki T's, Incorporated. You have only the following information on the firm at year-end: Net income is $250,000, total debt is $2.5 million, and debt ratio is 55 percent. What is Nikki T's ROE for next year? Note: Do not round intermediate calculations and round your final answer to 2 decimal places. ROE %
Ten years ago, you saved $5,000 in bank A that pays a compounding interest rate. You also saved $7,500 in bank B that pays a simple interest rate. Both accounts have $10,000 now. How much will you have in the two accounts at the end of year 10? The account balance in bank A will be $20,000. The account balance in bank B will be $15,000. The account balance in bank A will be $20,000. The account balance in bank B will be $12,500. The account balance in bank A will be $25,000. The account balance in bank B will be $15,000.

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