You forecast the company RIO will have a sustainable ROE of 15% in the future, similar to the industry average of 15%. The company has a dividend payout ratio of 50% versus industry average of 50%. The company had less debt and operation leverage compare to industry, as a result , RIO has a beta of 1.8 versus the industry average of 2. Based on these information, should the company RIO have a higher or lower PE ratio than the industry average ? Given a risk free rate of 2% and market risk premium of 8%, what is RIO’s “intrinsic” forward PE ratio based on formula?

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Q: You forecast that the company is going to reduce costs in the future, thus improve profit margin…

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A: ROE (Return on Equity) is a financial metric that calculates the profitability of a company by…

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Q: A company's tax rate is 40%, its beta is 1.20, and it uses no debt. However, the CFO is consideri…

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A:

Q: Calcul Baxter P/E ra Hint: F Not th someti P/E eq Note: E

A: Retention ratio = 63%ROE = 15%Discount rate =12%

Q: Using the key value driver formula, what is the enterprise value in each scenario?

A: key driver formula scenario 1---->                                                      Value=…

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A: As per DuPont analysis, the ROE can be found by multiplying the value of the equity multiplier along…

Q: Alpha Inc.'s beta coefficient is 1.4, the risk-free rate is 10 percent, and the market risk premium…

A:

Q: Consider this case: Globex Corp. has a capital structure that consists of 35% debt and 65%…

A: Levered beta = 1.10 Debt ratio = 35% Equity ratio = 65% Tax rate = 25%

Q: The market capitalization rate for Admiral Motors Company is 7%. Its expected ROE is 12% and its…

A: market capitalization rate = r = 7%Return on Equity = ROE = 12%Earning Per Share = EPS = $6plowback…

Q: ATEch has fixed costs of $8 million and profits of $5 million. Its competitor ZTech is roughly the…

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A: The Capital Asset Pricing Model (CAPM) is a widely used financial model that provides a framework…

Q: Suppose Micro-Shave growth rate in sales is forecast as 13% rather than 10%. If all ratios stay the…

A: Sales growth rate = 13% s0 = $3000 million A0*/ S0 = 66.666% L0*/ S0 = 6.667% Profit margin (M) =…

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Q: Calculate the P/E ratio Baxter has a retention ratio of 62%, a ROE of 17%, and a discount rate of…

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Q: XYZ Fried Chicken is trying to determine its WACC at the optimal capital structure. The firm now has…

A: Debt to equity (D/E) = 0.5 Weight of equity (We) = E/(D+E) = 2/3 Weight of debt (Wd) = 1/3 Pre tax…

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A: The problem is asking us to calculate the unlevered beta of a company using Hamada's equation. The…

Q: You are going to value Lauryn's Doll Company using the FCF model. After consulting various sources,…

A: Equity beta = 1.5Debt-equity ratio = 0.3Tax rate = 21%

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A: The rate at which a company finances all of its capital i.e, debt and equity is known as WACC. This…

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A: Equity beta = 1.6Debt-to-equity ratio = 0.5Tax rate = 21%Risk free rate = 5%Market risk premium =…

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Q: Samuel Inc.,  hired you as a consultant to help estimate its cost of capital. You have obtained the…

A: Cost of Equity(ke) is cost incurred by firm by having equity component in capital structure.…

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A: The Weighted Average Cost of Capital (WACC) is a critical financial metric that serves as a…

Q: use excel and explain step by step

A: The final answer is:The WACC for company XYZ is 11.04%.This means that the firm must earn at least…

Production Budget

A budget can be defined as a financial plan designed by an undertaking for a definite period in the future that can contribute towards enhancing the financial success of the business undertaking. It is used to estimate the revenue and expenses. The budget generally takes into account both current and future income and expenses.