Your firm has an ROE of 12.1%, a payout ratio of 21%, $581,200 of stockholders' equity, and $366,400 of debt. If you grow at your sustainable growth rate this year, how much additional debt will you need to issue? The sustainable growth rate is %. (Round to three decimal place.)

Your firm has an ROE of 12.1%, a payout ratio of 21%, $581,200 of stockholders' equity, and $366,400 of debt. If you grow at your sustainable growth rate this year, how much additional debt will you need to issue? The sustainable growth rate is %. (Round to three decimal place.)

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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HighGrowth Company has a stock price of $17. The firm will pay a dividend next year of $1.09, and its dividend is expected to grow at a rate of 3.7% per year thereafter. What is your estimate of HighGrowth's cost of equity capital? The required return (cost of capital) of levered equity is %. (Round to one decimal place.)
An all-equity-financed firm plans to grow at an annual rate of at least 24%. Its return on equity is 45%. What is the maximum possible dividend payout rate the firm can maintain without resorting to additional equity issues? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)
As an analyst, you have gathered the following information on a company you are tracking. The current annual dividend is $1.75. Dividends are expected to grow at a rate of 14% over the next 4 years, and then decline linearly to 5% over the next 7 years, and then remain at a long term equilibrium growth rate of 5% in perpetuity; the required return is 10%. Calculate the value of the company
Consider a firm that just paid a dividend of $5.50 per share. The company expects growth in the coming 2 years to be 17%. After the second year, the firm expects dividends to grow at a constant rate of 3% per year. Assume the required rate of return is 10%
Laurel Enterprises pays annual dividends, and the next dividend is expected to be in one year. Laurel expects earnings next year of $3.58 per share and has a 50% retention rate, which it plans to keep constant. Its equity cost of capital is 11%, which is also its expected return on new investment; this is expected to continue forever. What do you estimate the firm's current stock price to be? (Hint: its next dividend is due in one year.) C The current stock price will be $ (Round to the nearest cent.)
You anticipate that Liebendauer Enterprises (ticker: LBE) will have earnings per share of $5 this year. Furthermore, you expect that they will pay out $2.50 of these earnings to shareholders in the form of a dividend at the end of this year. You estimate that LBE's return on new investments is 15% and their equity cost of capital is 13%. Your expected growth rate for LBE's dividends will be closest to: OA. 3% OB. 6.5% OC. 7.5% OD. 4.5%
Jia's Fashions recently paid a R2 annual dividend. The company is projecting that its dividends will grow by 20 percent next year, 12 percent annually for the two years after that, and then at 6 percent annually thereafter. Based on this information, how much should Jia's Fashions common stock sell for today if her required return is 10.5%? Which answer is correct? A. R54.90 B. R60.80 C. R66.60 D. R69.30
An all-equity-financed firm plans to grow at an annual rate of at least 19%. Its return on equity is 31%. What is the maximum possible dividend payout rate the firm can maintain without resorting to additional equity issues? (Do not round intermediate calculations. Enter your answer as a percent rounded to 1 decimal place.)
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.
CX Enterprises has the following expected dividends: $1.03 in one year, $1.17 in two years, and $1.32 in three years. After that, its dividends are expected to grow at 4.2% per year forever (so that year 4's dividend will be 4.2% more than $1.32 and so on). If CX's equity cost of capital is 12%, what is the current price of its stock? The price of the stock will be $ (Round to the nearest cent.)
Laurel Enterprises expects earnings next year of $4.29 per share and has a 50% retention rate, which it plans to keep constant. Its equity cost of capital is 11%, which is also its expected return on new investment. Its earnings are expected to grow forever at a rate of 5.5% per year. If its next dividend is due in one year, what do you estimate the firm's current stock price to be? The current stock price will be $ (Round to the nearest cent.)

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