INTERMEDIATE FINANCIAL MANAGEMENT
14th Edition
ISBN: 9780357516669
Author: Brigham
Publisher: CENGAGE L
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Question
Chapter 26, Problem 2MC
Summary Introduction
Case summary:
Company H is a hardware chain, focused in “do it yourself” equipment rentals and materials. The one method to utilize excess fund is an acquisition. Company H’s boss and person Z decided to value the potential target of company L. For the purpose of this person Z conducted certain estimation regarding the company L.
To discuss: The difference among hostile merger and friendly merger.
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You've collected the following information from your favorite financial website.
52-Week Price
Dividend
Hi
77.40
Lo
Stock (Dividend)
Yield % PE Ratio Close Price Net Change
10.43
Acevedo .36
2.6
6
13.90
-.24
55.81
33.42
Georgette, Incorporated 1.54
3.8
10
40.43
-.01
131.04
70.05
YBM 2.55
2.9
10
89.08
3.07
50.24
35.00
13.95
Manta Energy .80
5.2
6
20.74
Winter Sports .32
1.5
28
15.43
??
-.26
.18
According to analysts, the growth rate in dividends for YBM for the next five years is expected to be 21 percent. Suppose YBM meets
this growth rate in dividends for the next five years and then the dividend growth rate falls to 5.75 percent, indefinitely. Assume
investors require a return of 14 percent on YBM stock. According to the dividend growth model, what should the stock price be today?
Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
1. Waterfront Inc. wishes to borrow on a short-term basis without reducing its current ratio below 1.25. At present its current assets and current liabilities are $1,600 and $1,000 respectively. How much can Waterfront Inc. borrow?
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