Analysts were forecasting consensus earnings per share

Assignment Help Financial Management

Reference no: EM131052390

Maxim Inc. reported a per-share book value of $10.47 in its balance sheet on December 31, 2014. In early 2015, analysts were forecasting consensus earnings per share of $1.71 for 2015 and 1.96 for 2016. Assume a dividend payout ratio of 50% and required rate of return of 10%.

(a) Calculate the per share value in early 2015 assuming that residual earnings will grow at long-term growth rate of 4%, the average GDP growth rate, after 2016. [3]

(b) Maxim Inc. was traded at $36 per share in early 2015. What is the forecast of the residual earnings growth rate after 2016 that is implied in the stock price of $36?

Reference no: EM131052390

Questions Cloud

Assume that the maintenance costs occur at year-end : Gold Star Industries is contemplating a purchase of computers. The firm has narrowed its choices to the SAL 5000 and the HAL 1000. Gold Star would need seven SALs, and each SAL costs $3,150 and requires $360 of maintenance each year. Assume that the ..

What classes of nish materials can you use in exit stairway : What is the required re resistance rating for the walls around the elevator shafts? For the purposes of this exercise, when referring to Figure 22.7, assume the highest rating requirement where a range of requirements is provided.

Relationship between price and estimated average quantity : BUS1BAN Group Research Project - What is the relationship between price and estimated average quantity consumed by students in your sample?

Provide an example of chiaroscuro artwork : You must provide a personal definition utilizing academic sources for terms and provide an example of following artwork that exemplifies the definition provided. ottonian, carpet page, Bible, chiaroscuro and pagan art.

Analysts were forecasting consensus earnings per share : Maxim Inc. reported a per-share book value of $10.47 in its balance sheet on December 31, 2014. In early 2015, analysts were forecasting consensus earnings per share of $1.71 for 2015 and 1.96 for 2016. Calculate the per share value in early 2015 ass..

Efficiency ratios-asset turnover ratios and leverage ratios : Nederland Consumer Products Company Income Statement for the Fiscal Year Ended September 30, 2014 Net sales $59,440 Cost of products sold 25,757 Gross profit $33,683 Marketing, research, administrative exp. 16,000 Depreciation 820 Operating income (l..

What is an appropriate application for each : What is an appropriate application for each?

How did egypt change and did those change last past his rule : Ancient Egypt was a culture fueled by religion and one that spent lifetimes preparing for the afterlife. When the Pharaoh Akhenaten took the throne, how did Egypt change and did those changes last past his rule?

Analyze the results using moisture analyzer on frozen dough : This is to be used in a research project. Thus it needs to well explained. No number of words or pages. This is to analyze the results of my experiment using moisture analyzer and SEM on frozen dough

User Account

All Pages