Homework Answers
Answer: Option B is correct
The firm's stocks can be valued using ratios like earnings per
share, present value of growth opportunity.
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Question 18 of 20 1 Points Firms that do not pay dividends can be valued using...
Hewlett-Packard’s (HP) expected dividends for the coming year are $0.60 and expected earnings per...
Hewlett-Packard’s (HP) expected dividends for the coming year are $0.60 and expected earnings per share are $0.80. The required rate of return for HP is 15%. HP’s ROE is 18% and plowback ratio is 25%. Using the constant-growth dividend discount method, calculate the firm’s intrinsic value. (10 points) Calculate the present value of growth opportunities for HP. (10 points) Suppose you found a positive PVGO for HP. In this case, should the firm continue with its current dividend policy or...
state true or false and briefly explain your answer 5. Firms that do not pay any...
state true or false and briefly explain your
answer
5. Firms that do not pay any dividends cannot be valued using dividend discount model but can be valued using residual income model. 6. A company's cost of debt is the contracted rate that it pays on its outstanding debt. 7. Enterprise value (EV) to EBITDA ratio is better than price to earnings ratio for relative valuation. 8. Price to EBITDA ratio should not be used for relative valuation.
Problem 18-11 The Fl Corporation's dividends per share are expected to grow indefinitely by 5% per...
Problem 18-11 The Fl Corporation's dividends per share are expected to grow indefinitely by 5% per year. a. If this year's year-end dividend is $7.50 and the market capitalization rate is 8% per year, what must the current stock price be according to the DOM? Current stock price b. If the expected earnings per share are $15.00, what is the implied value of the ROE on future investment opportunities? (Round your answer to 2 decimal places.) Value of ROE c....
Can somebody please help me to solve these problems 3. Doolittle Co. is expected to pay...
Can
somebody please help me to solve these problems
3. Doolittle Co. is expected to pay a dividend of $2 next year. Doolittle is expected to pay 30% of its earnings as dividends and will have an ROE of 8% until the fourth year. After that, its ROE is expected to decrease to 5% and the dividend payout ratio will increase to 50%. Applying the cost of equity of 10% and the multistage growth model, compute the intrinsic price of...
QUESTION 19 Question 19: The following are all technical indicators except a. contrary opinion b. support...
QUESTION 19 Question 19: The following are all technical indicators except a. contrary opinion b. support and resistance levels c. calculations of a company's free cash flow d. moving averages e. analyzing price channels stocks were placed in 4 points QUESTION 20 Question 20: A company has a market capitalization of $30 billion, total assets on the books of $15 billion, net income of $5 billion and cash flow of $3 billion. Its P/E ratio is a. 5 b....
1) A company recently paid out a $4 per share dividend on their stock. Dividends are...
1) A company recently paid out a $4 per share dividend on their stock. Dividends are projected to grow at a constant rate of 5% into the future, and the required return on investment is 8%. After one year, the holding period return to an investor who buys the stock right now will be: A. 5% B. 3% C. 8% D. 13% 2) A company recently paid out a $2 per share dividend on their stock. Dividends are projected to...
Fin Corp currently pays out 100% of its earnings to shareholders as dividends. It expects to...
Fin Corp currently pays out 100% of its earnings to shareholders as dividends. It expects to yield $4 earnings per share forever starting next year (exactly one year from now). The market risk premium is 8%, and the risk-free rate is 4%. Fin Corp’s stock beta β is 1. (a) What is the required rate of return for Fin Corp stocks? (b) Calculate its stock’s current intrinsic value if the firm keeps its current payout policy forever. (c) If Fin...
please include all work please include all work 3. Hewlett-Packard's (HP) expected earnings per share are...
please include all work
please include all work
3. Hewlett-Packard's (HP) expected earnings per share are $0.80. The required rate of return for HP is 15%. HP's ROE is 18% and plowback ratio is 25%. A. Using the constant-growth dividend discount method, calculate the firm's intrinsic value. (10 points) B. Calculate the present value of growth opportunities for HP. (10 points) C. Suppose you found a positive PVGO for HP. In this case, should the firm continue with its current...
can someone please help me with this question Cash and stock dividends lester corporation has 30,000 shares of $1 par va...
can someone please help me with this question Cash and stock dividends lester corporation has 30,000 shares of $1 par value common stock outstanding. The company has 250,000 of retained earnings. at year end the company declares cash dividends of $3.00 per share and a 5 percent stock dividend. the market price of the stock at the declaration date is $40 per shatre. three weeks later the company pays the dividends a) prepare the journal entry for the declaration of...
Cache Creek Manufacturing Company is expected to pay a dividend of $1 in the upcoming year....
Cache Creek Manufacturing Company is expected to pay a dividend of $1 in the upcoming year. Dividends are expected to grow at 7% per year. The stock's current price is $20.00. Using the constant growth DDM, the market capitalization rate is _ A9% B. 12% C. 14% D. 18% The free cash flow to firm is expected to be $2 million and remains constant forever, the WACC is 10% and the cost of equity is 15%. If the market value...
state true or false and briefly explain your
answer
5. Firms that do not pay any dividends cannot be valued using dividend discount model but can be valued using residual income model. 6. A company's cost of debt is the contracted rate that it pays on its outstanding debt. 7. Enterprise value (EV) to EBITDA ratio is better than price to earnings ratio for relative valuation. 8. Price to EBITDA ratio should not be used for relative valuation.
Problem 18-11 The Fl Corporation's dividends per share are expected to grow indefinitely by 5% per year. a. If this year's year-end dividend is $7.50 and the market capitalization rate is 8% per year, what must the current stock price be according to the DOM? Current stock price b. If the expected earnings per share are $15.00, what is the implied value of the ROE on future investment opportunities? (Round your answer to 2 decimal places.) Value of ROE c....
Can
somebody please help me to solve these problems
3. Doolittle Co. is expected to pay a dividend of $2 next year. Doolittle is expected to pay 30% of its earnings as dividends and will have an ROE of 8% until the fourth year. After that, its ROE is expected to decrease to 5% and the dividend payout ratio will increase to 50%. Applying the cost of equity of 10% and the multistage growth model, compute the intrinsic price of...
please include all work
please include all work
3. Hewlett-Packard's (HP) expected earnings per share are $0.80. The required rate of return for HP is 15%. HP's ROE is 18% and plowback ratio is 25%. A. Using the constant-growth dividend discount method, calculate the firm's intrinsic value. (10 points) B. Calculate the present value of growth opportunities for HP. (10 points) C. Suppose you found a positive PVGO for HP. In this case, should the firm continue with its current...
Cache Creek Manufacturing Company is expected to pay a dividend of $1 in the upcoming year. Dividends are expected to grow at 7% per year. The stock's current price is $20.00. Using the constant growth DDM, the market capitalization rate is _ A9% B. 12% C. 14% D. 18% The free cash flow to firm is expected to be $2 million and remains constant forever, the WACC is 10% and the cost of equity is 15%. If the market value...
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