A large commercial bank, You are valuing First Bank, a

A large commercial bank

Reference no: EM13722268

You are valuing First Bank, a large commercial bank . The bank reported earnings per share of $4.00 last year , and paid out dividends of $2.40 per share. The ea rnings are expected to grow 4% a year in perpetuity, and the firm is expected to maintain its existing payout ratio. The firm'sequity beta is 1.25, the risk-free rate is 5% and the return on the market portfolio is 8.2%.

Reference no: EM13722268

Questions Cloud

What will the price-earnings ratio at the end of year : Mobil Oil is currently selling at $41 per share. Based on the last 12 months figures, the price earnings ratio is 4 and the dividend yield is 8%. Dividends are expected to grow at an annual compound rate of 6% and earnings at a rate of 12%.

What will your annual loan payment be : Dinero Bank offers you a $60,000, five-year term loan at 7.5 percent annual interest. What will your annual loan payment be? (Do not round intermediate calculations and round your final answer to 2 decimal places. (e.g., 32.16))

Managing your individual retirement accounts. : You are managing your individual retirement accounts. Are you worried about losing money in your retirement accounts? What could you do to reduce risk or increase risk if you’re not worried about losing money? Explain.

Assume that the real risk-free rate : Assume that the real risk-free rate is 2% and that the maturity risk premium is zero. If a 1 year Treasury bond yield is 5% and a 2 year Treasury bond yields 7%,what is the 1-year interest rate that is expected for the year 2? Comment on why the aver..

A large commercial bank : You are valuing First Bank, a large commercial bank

Down payment-bonuses and discount rate : You will receive 2,500 in bonuses each year for the next three years (at the end of each year). You are hoping to use these bonuses for a car down payment in about ten years. At a 7.79% discount rate, how much will you have saved? (Round to two decim..

What is the market user cost of owner-occupied housing : You are looking at a new home in suburban New Jersey which is selling for $250,000. The rent on similar homes in the same development is $1,500 per month. Based on this information, what is the market user cost of owner-occupied housing?

Calculate christies cash conversion cycle : The Christie Corporation is trying to determine the effect of its inventory turnover ratio and days sales outstanding (DSO) on its cash flow cycle. Christie’s sales last year (all on credit) were $150,000, and it earned a net profit of 6%, or $9,000...

How much working capital does a corporation : How much working capital does a corporation with $50 million in short-term debt and a current ratio of 4 have? Show work. Explain what working capital is used for. List three sources of working capital

User Account

All Pages