Sustainable growth rate, g = ROE * Plowback ratio
g = 15% * 40%
g = 6.00% (Option C)
25) A company with a return on equity of 15% and a plowback ratio of 40%...
For a firm that expects earnings next year of $10.00 per share, has a plowback ratio of 35%, a return on equity of 20%, and a required return of 15%. a. Calculate the sustainable growth rate of the firm (Already calculated to be 7%) b. Calculate the current stock price and next year's expected stock price assuming that the growth rate is constant. (Already calculated current to be $81.25) c. Redo the calculation if the growth of the company's dividends...
The market requires a return of 9% from XYZ, Inc. The firm plowback 50% of its earnings, and its return on equity and earnings per share are expected to be 14% and $7, respectively. a. What will be XYZ's growth rate? (Input your answer as a nearest whole percent.) b. Calculate XYZ's P/E ratio? (Do not round intermediate calculations.)
The market requires a return of 10% from XYZ, Inc. The firm plowback 80% of its earnings, and its return on equity and earnings per share are expected to be 12% and $6, respectively. a. What will be XYZ's growth rate? (Input your answer as a nearest whole percent.) Growth Rate = ? b. Calculate XYZ's P/E ratio? (Do not round intermediate calculations.) P/E Ratio = ?
MF Corp. has an ROE of 18% and a plowback ratio of 40%. The market capitalization rate is 13%. a. If the coming year's earnings are expected to be $2.70 per share, at what price will the stock sell? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price b. What price do you expect MF shares to sell for in three years? (Do not round intermediate calculations. Round your answer to 2 decimal places.) Price
9. What is the plowback ratio for a firm that has earnings per share of $20 and pays out $5 per share as dividend payment? A) 75% B) 50% C) 25% D) 15% 10. What is the risk premium for a stock with Beta of 1.5 and a market-risk premium of 20%?
MedTech Industries expects earnings of $1 per share next year. Its return on equity (ROE) is 15% and its plowback ratio is 60%. The company's stock price is $40. A) What is the cost of capital of this company? (Note: Your answer should be a number in percentage form. Do not enter '%'.) ____% B) How much of the company's stock value is attributable to the present value of its growth opportunities (PVGO)? $_____
9. What is the plowback ratio for a firm that has earnings per share of $20 and pays out $5 per share as dividend payment? A) 75% B) 50% C) 25% D) 15% (A 0 C L(0 10. What is the risk premium for a stock with Beta of 1.5 and a market-risk premium of 20%?
9) A firm has an ROE of 15% and a debt-equity ratio of 40%. If it wishes to grow by 9% a year without external financing, what is the maximum proportion of earnings that it can pay out?9) _______ A) 12% B) 1% C) 16% D) 10%
Bluegrass Mint Company has a debt-equity ratio of .35. The required return on the company's unlevered equity is 12.1 percent and the pretax cost of the firm's debt is 6.3 percent. Sales revenue for the company is expected to remain stable indefinitely at last year's level of $18.6 million. Variable costs amount to 60 percent of sales. The tax rate is 21 percent and the company distributes all its earnings as dividends at the end of each year. (a) If...
Bluegrass Mint Company has a debt-equity ratio of .35. The required return on the company's unlevered equity is 12.1 percent and the pretax cost of the firm's debt is 6.3 percent. Sales revenue for the company is expected to remain stable indefinitely at last year's level of $18.6 million. Variable costs amount to 60 percent of sales. The tax rate is 21 percent and the company distributes all its earnings as dividends at the end of each year. (a) If the...