What information do investors combine to estimate a stock’s price? Cash-flows and Discount Rates Cash-flows and...
What information do investors combine to estimate a stock’s price?
| Cash-flows and Discount Rates |
| Cash-flows and earnings |
| Cash-Flows and P/E ratios |
| Discount Rates and earnings |
Homework Answers
Cash flow and discount rates
Stock price is estimated by calculating present value of all expected future cash inflow arising to the firm. Thus investors takes into consideration cash flows and discount rate
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What information do investors combine to estimate a stock’s
price?
Cash-flows and Discount Rates
Cash-flows and...
Explain why investors look at a stock’s P/E ratio rather than its price to determine if...
Explain why investors look at a stock’s P/E ratio rather than its price to determine if the stock is cheap or expensive?
Given the following information regarding cash flows and discount rates, answer the questions below. Year 0...
Given the following information regarding cash flows and discount rates, answer the questions below. Year 0 1 2 3 4 Nominal Cash Flow -15,000 5,000 7,500 3,500 1,000 Inflation 0% 2% 1.75% 1.5% 1.25% Real Rate 0% 4% 4.5% 5% 5.5% a) What are the nominal rates for each year? b) What are the discount rates for each year? c) What is the NPV of the project?
Please use Excel formulas Question 4: Given the following information regarding cash flows and discount rates,...
Please use Excel formulas
Question 4: Given the following information regarding cash flows and discount rates, answer the questions below. Year 2 3 4 Nominal Cash Flow 7,500.00 1,000.00 -15,000.00 5,000.00 3,500.00 Inflation 1.50% 1.75% 0.00% 2.00% 1.25% Real rate 5.00% 5.50% 0.00% 4.00% 4.50% What are the nominal rates for each year? (5) a) What are the discount rates for each year? (5) c) What is the NPV of the project? (5) b)
What determines the stock market valuations? Is a stock’s price primarily determined by the discounted sum...
What determines the stock market valuations? Is a stock’s price primarily determined by the discounted sum of future cash flows, monetary policy, or fear and greed? Is market timing possible using sentiment indicators such as put/call ratios and Investor’s Intelligence surveys?
Given the following information regarding cash flows and discount rates, answer the questions below. Year 0...
Given the following information regarding cash flows and discount rates, answer the questions below. Year 0 1 2 3 4 Nominal Cash Flow -11,000 4,000 5,000 6,000 1,000 Real Rate 0% 6% 5% 4% 5% Inflation Rate 0% 3.5% 3% 2.5% 2.5% a) What are the nominal rates for each year? b) What is the NPV of the project?
Determine the cash flows from the firm and the cash flows to investors of the firm....
Determine the cash flows from the firm and the cash flows to investors of the firm. 14. Building an Income Statement During the year, the Senbet Discount Tire Company had gross sales of $757,000. The company's cost of goods sold and selling expenses were $249,800 and $146,000, respectively. The company also had debt of $675,000, which carried an interest rate of 6 percent. Depreciation was $87,000. The tax rate was 35 percent. a. What was the company's net income? b....
Why is the statement of cash flows necessary? Because investors and managers wanted information on how...
Why is the statement of cash flows necessary? Because investors and managers wanted information on how much cash went up or down in a period Because investors and managers needed information on the net profit of a period Because investors and managers wanted additional information on why cash went up or down in a period Because the income statement is constructed using cash-basis accounting
31. Why is the statement of cash flows necessary? Because investors and managers wanted information on...
31. Why is the statement of cash flows necessary? Because investors and managers wanted information on how much cash went up or down in a period Because investors and managers needed information on the net profit of a period Because investors and managers wanted additional information on why cash went up or down in a period Because the income statement is constructed using cash-basis accounting
4. Here are data on two stocks, both of which have discount rates of 15% What...
4. Here are data on two stocks, both of which have discount rates of 15% What are the dividend payout ratios for each firm? What are the expected dividend growth rates for each firm? What is the proper stock price for each firm? 5. Here are the expected cash flows for three projects What is the payback period on each of the projects? (3 points) Given that you wish to use the payback rule with a cutoff period of 2...
The Price is Right! Utilizing 1 of these public companies—Target, Coke, Pepsi, Wal-Mart, or J. P...
The Price is Right! Utilizing 1 of these public companies—Target, Coke, Pepsi, Wal-Mart, or J. P. Morgan—determine the right price for that company’s stock in the following 5 easy steps: Visit this Web site. Type in your selected company’s name in the Quote Search box, and select your company's stock symbol. Jot down the current stock price. Select the Analysis tab, and find the Analyst Recommendation box. Jot down the stock’s Earnings Per Share (EPS) Estimate. Select the Price Ratios...
Please use Excel formulas
Question 4: Given the following information regarding cash flows and discount rates, answer the questions below. Year 2 3 4 Nominal Cash Flow 7,500.00 1,000.00 -15,000.00 5,000.00 3,500.00 Inflation 1.50% 1.75% 0.00% 2.00% 1.25% Real rate 5.00% 5.50% 0.00% 4.00% 4.50% What are the nominal rates for each year? (5) a) What are the discount rates for each year? (5) c) What is the NPV of the project? (5) b)
Determine the cash flows from the firm and the cash flows to investors of the firm. 14. Building an Income Statement During the year, the Senbet Discount Tire Company had gross sales of $757,000. The company's cost of goods sold and selling expenses were $249,800 and $146,000, respectively. The company also had debt of $675,000, which carried an interest rate of 6 percent. Depreciation was $87,000. The tax rate was 35 percent. a. What was the company's net income? b....
4. Here are data on two stocks, both of which have discount rates of 15% What are the dividend payout ratios for each firm? What are the expected dividend growth rates for each firm? What is the proper stock price for each firm? 5. Here are the expected cash flows for three projects What is the payback period on each of the projects? (3 points) Given that you wish to use the payback rule with a cutoff period of 2...
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