PLEASE ONLY ANSWER P3. A and B.
P3. Use all the projection and data of NSM from the problem P2 except the following assumption: HES Inc. expects to withdraw only 30% of the income of NSM as dividends.
Questions:
a. Using the residual income valuation model, compute the value of NSM as of January 1, 2017.
b. What advice would you provide to HES regarding the ownership of NSM?
Below is the P2 question and answer that you wll need to calculate P3.
P2. NSM, Inc. is a distributor of electrical supplies. Management for the company has developed the following forecasts of net income:
Forecasted
Year Net Income
2017 $17,540
2018 $23,600
2019 $26,000
2020 $22,000
2021 $18,500
HES Inc. wholly owns the firm NSM. Jane King, CFO of HES, made the projections for NSM.
Jane King expects net income to grow at a rate of 8 percent per year after 2021 and the company's cost of equity capital is 14%. NSM common shareholders' equity at January 1, 2017 is $100,000. Assume that HES Inc. expects to withdraw all the income of NSM as dividends.
Questions:
a. Using the residual income valuation model, compute the value of NSM as of January 1, 2017.
b. What advice would you provide to HES regarding the ownership of NSM?
The company's stock value has increased, the net income has growth and the value of company using residual income is high, I would recommend to HES to hold ownership of MSN purchase stock.
We need at least 10 more requests to produce the answer.
0 / 10 have requested this problem solution
The more requests, the faster the answer.
PLEASE ONLY ANSWER P3. A and B. P3. Use all the projection and data of NSM...
GL1201 - Based on Exercise 12-11 LO P2, P3, A1 Use the following financial statements and additional information STREAMLINE INC Comparative Balance Sheets June 30, 2019 and 2018 Assets Cash 2019 2018 Accounts receivable, net Inventory Prepaid expenses Total current assets Equipment Accum. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Wages payable Income taxes payable Total current liabilities Notes payable (long term) Total liabilities $100, 200 73,000 63,000 4,900 241,100 147,000 $ 44,100 57,00 88,000 6.100 195, 200 (36,000)...
Saved GL1201 - Based on Exercise 12-11 LO P2, P3, A1 Use the following financial statements and additional information STREAMLINE INC. Comparative Balance Sheets June 30, 2019 and 2018 2019 2018 Assets Cash Accounts receivable, net Inventory Prepaid expenses Total current assets Equipment Acc. depreciation-Equipment Total assets Liabilities and Equity Accounts payable Wages payable Income taxes payable Total current Ilabilities Notes payable long term) Total liabilities Equity Common stock, 55 par value Retained earnings Total Libilities and equity Slee, 200...
Use the Income Statement, Statement of Comprehensive Income, and Balance Sheet for Alphabet (Google) to answer the following questions. 1. How much is the change in equity from non-owner sources for the most current year? Show the amount and the name of the line item. 2. How much are the outflows, using up of asset, or incurrence of liabilities for the most current period? Show the amount and the name of the line item. 3. How much is income from...
please answer all Pitino acquired 90 percent of Brey's outstanding shares on January 1, 2016, in exchange for $405,000 in cash. The subsidiarys stockholders' equity accounts totaled $389,000 and the noncontrolling interest had a fair value of $45,000 on that day. However a building (with a nine-year remaining life) in Brey's accounting records was undervalued by $27,000. Pitino assigned the rest of the excess fair value over book value to Brey's patented technology (four year remaining life) Brey reported net...
Please bold answer in explanation Indicated by parentheses). Michael acquired all of Aaron's outstanding voting stock on January 1, 2017. by Issuing 20,000 shares of Its own $1 par common stock. On the acquisition date, Michael Company's stock actively traded at $3250 per share. Aaron Company 12/31/21 $ (418,588) 164,250 181,500 Revenues Cost of goods sold Amortization expense Dividend income Net income Retained earnings, 1/1/21 Net income (above) Dividends declared Retained earnings, 12/31/21 Cash Receivables Inventory Investment in Aaron Company...
Q2 /please Answer part (B (2) Double-diminishing-balance method ) I have all answers I need only part 2 for all years Pharoah Limited purchased a machine on account on April 2, 2018, at an invoice price of $356,620. On April 4, it paid $2,130 for delivery of the machine. A one-year, $3,970 insurance policy on the machine was purchased on April 5. On April 18, Pharoah paid $7,590 for installation and testing of the machine. The machine was ready for...
please I am having a lot of problems with the questions above .I am getting ready for the final this week.Can you please answer all of them . Tab 07) How many of the following events would require an expense to be recorded? Ordering office supplies Hiring a receptionist Paying employces' salaries for the current month Receiving but not paying a current utility bill Paying for insurance in advance A) One D)Iwo. C) Three. B) Four 08) The balance sheet...
Refer to the following financial statements and answer the following questions hints:- 13. cash provided (used) by operating activities, investing activities, and financing activities. 14. cash-based net income. 15. estimate of uncollectible accounts receivable. 16. calculate and interpret accounts receivable ratio (most recent and prior period). hints:- 2:12 PM Wed Apr 15 39%). A 51.04cdn.com PART II NIKE, Inc. Consolidated Statements of Income in mWors, except per share data) Revenues Cost of sales Gross profit Demand creation expense Operating overhead...
SECTION A (40 marks): Answer ALL Questions in this section. QUESTION ONE a) Aseda Ltd incurred the following cost in its manufacturing operations GH¢ Cost of material purchase 20,000 Import duties 400 Trade discount @10% of purchase cost Cash discount 500 Irrecoverable taxes 1,000 Salary of factory plant operator 2,500 Direct labour 5,000 Salary of factory supervisor 4,000 Cost of expected production losses 800 Administrative overhead (Note) 16,000 Cost of storage of raw material for further processing 2,000 Marketing cost...