is defined as the present value of all cash payments to the owner of the company's...
is defined as the present value of all cash payments to the owner of the company's equity.
Select one:
a. dividend payout ratio
b. intrinsic value
c. market capitalization rate
d. plowback ratio
Homework Answers
Intrinsic value is defined as the present value of all cash payments to the owner of the company's equity.
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is defined as the present value of all cash payments to the
owner of the company's...
Security valuation: equity: Next year, a company expects net income of $44 million. It pays 50%...
Security valuation: equity: Next year, a company expects net income of $44 million. It pays 50% of its earnings out in dividends and has a cost of equity capital of 11%. a. If the company's NI has a 7% growth rate, what is the estimated value of your company? b. What is its re-investment rate (i.e. internal rate of return on earnings retained and reinvested)? Now suppose instead that the company's re-investment rate (i.e. internal rate of return) on all...
"Present value equals the present value of all cash flows accruing to the asset's owner". do...
"Present value equals the present value of all cash flows accruing to the asset's owner". do you agree to this? why or why not?
11. The net present value is best defined as the difference between an investment's: A) cash...
11. The net present value is best defined as the difference between an investment's: A) cash inflows and outflows B) market value and book value C) cash inflows and cost D) market value and cost E) cash inflows and market value 12. The largest risk of corporate bonds is: A) Interest rate risk B) Default risk C) Business risk D) Liquidity risk E) None of the above 13. Pro forma financial statements can best be described as financial statements: A)...
MULTIPLE CHOICES value of each year's coupon payiments b. The yield to maturity is a measure...
MULTIPLE CHOICES
value of each year's coupon payiments b. The yield to maturity is a measure of a bond's total return, only including the coupon income. . If you buy the bond today and hold it to maturity, your return will be yield to d. The relationship between price and yield is that the higher the price you pay for a bond, the higher the yield 1o. Which one of the following statements is correet regarding interest rates and bond...
Questions 1-3 Create an excel file and solve the following problems. 1. Firm ABC has a...
Questions 1-3
Create an excel file and solve the following problems. 1. Firm ABC has a current market value of $41 per share with earnings of $3.64. What is the present value of its growth opportunities if the required return is 992 Use excel spinners to change required return to 8%, 10%, 11%, and 12%. Record and report present values for each. 2. Firm X pays a current (annual) dividend of $1 and is expected to grow at 20% for...
Equity Valuation-Dividend Discount Model
Suppose Blue Jay Enterprises is all equity financed (they have no outstanding debt), has asset worth $200 million and an ROE of 7%. Blue Jay also has $2 million shares outstanding and a plowback ratio of b = 60%. Suppose its market capitalization rate is 5% (k = 0.05).(a) What is Blue Jay's earnings per share? What is the price of Blue Jay'sstock?(b) What is its dividend growth rate, g?(c) What is its price one year from now (assume dividends are...
A stock's market capitalization is determined by a. Multiplying the number of shares outstanding by the...
A stock's market capitalization is determined by a. Multiplying the number of shares outstanding by the latest stock price. b. Trial and error using its beta and the risk free rate. c. The book value of its equity times the company's debt ratio. d. The present value of its future cash flows discounted at the risk free rate.
(Present value of annuity payments) The state lottery's million-dollar payout provides for $1 million to be...
(Present value of annuity payments) The state lottery's million-dollar payout provides for $1 million to be paid in 20 installments of $50,000 per payment. The first $50,000 payment is made immediately, and the 19 remaining $50,000 payments occur at the end of each of the next 19 years. If 6 percent is the discount rate, what is the present value of this stream of cash flows? If 12 percent is the discount rate, what is the present value of the...
If the expectation of short-term interest rate remains the same in the future, the expectations theory...
If the expectation of short-term interest rate remains the same in the future, the expectations theory predicts that the yield curve will be while the liquidity preference theory predicts that the yield curve will be_ A B. C. D. Flat; flat Upward sloping; upward sloping Flat; upward sloping Upward sloping; flat The market capitalization rate on the stock of Aberdeen Wholesale Company is 12%. Its expected ROE is 10% am dots expected EPS is $3.00. if the firm's plow-back ratio...
Questions 4-6 4. Firm Y currently pays a dividend of $1.22, which is expected to grow...
Questions 4-6
4. Firm Y currently pays a dividend of $1.22, which is expected to grow indefinitely at 5%. If the current value of the firm's shares based on constant-growth DDM is $32.03, what is the required rate of return? 5. MM Corp, has an ROE of 16% and a plowback ratio of 50%. If the coming year's earnings are expected to be s per share, at what price will the stock sell? The market capitalization rate is 12%. 6....
11. The net present value is best defined as the difference between an investment's: A) cash inflows and outflows B) market value and book value C) cash inflows and cost D) market value and cost E) cash inflows and market value 12. The largest risk of corporate bonds is: A) Interest rate risk B) Default risk C) Business risk D) Liquidity risk E) None of the above 13. Pro forma financial statements can best be described as financial statements: A)...
MULTIPLE CHOICES
value of each year's coupon payiments b. The yield to maturity is a measure of a bond's total return, only including the coupon income. . If you buy the bond today and hold it to maturity, your return will be yield to d. The relationship between price and yield is that the higher the price you pay for a bond, the higher the yield 1o. Which one of the following statements is correet regarding interest rates and bond...
Questions 1-3
Create an excel file and solve the following problems. 1. Firm ABC has a current market value of $41 per share with earnings of $3.64. What is the present value of its growth opportunities if the required return is 992 Use excel spinners to change required return to 8%, 10%, 11%, and 12%. Record and report present values for each. 2. Firm X pays a current (annual) dividend of $1 and is expected to grow at 20% for...
If the expectation of short-term interest rate remains the same in the future, the expectations theory predicts that the yield curve will be while the liquidity preference theory predicts that the yield curve will be_ A B. C. D. Flat; flat Upward sloping; upward sloping Flat; upward sloping Upward sloping; flat The market capitalization rate on the stock of Aberdeen Wholesale Company is 12%. Its expected ROE is 10% am dots expected EPS is $3.00. if the firm's plow-back ratio...
Questions 4-6
4. Firm Y currently pays a dividend of $1.22, which is expected to grow indefinitely at 5%. If the current value of the firm's shares based on constant-growth DDM is $32.03, what is the required rate of return? 5. MM Corp, has an ROE of 16% and a plowback ratio of 50%. If the coming year's earnings are expected to be s per share, at what price will the stock sell? The market capitalization rate is 12%. 6....
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