Assume that growth rate is constant

Assignment Help Financial Management
Reference no: EM132001717

Pabon has a P/E of 10 and a dividend of $2 per share. It has 2 m shares outstanding and $80 m of book value of equity, as well as $160 million of debt. Pabon expects to sell $20m worth of sales and have EAT of $5m and keep 40% of its profit. Furthermore, it has $240m of assets. Its tax rate is .3, and its unlevered bheta is 1. The 10 year t bond rate is 3% while the ROR in the S&P has been 13 %. Calculate Pabon’s price, if we assume that its growth rate is constant.

Reference no: EM132001717

Questions Cloud

Examine how agriculture and living in modern cities : This paper will examine how agriculture and living in modern cities each have a negative impact on the environment
Estimate of the population mean energy usage : Construct a 95% confidence interval estimate of the population mean energy usage for this model of refrigerator.
Depict all the known relevant cash flows on a time line : Sunk costs and opportunity costs Masters Golf Products, Inc., spent 3 years and $1,000,000 to develop its new line of club heads to replace a line.
Calculate the amount of life insurance coverage : Calculate the amount of life insurance coverage John needs according to the Financial Needs Method.
Assume that growth rate is constant : Calculate Pabon’s price, if we assume that its growth rate is constant.
Determine what is the yield on 3-year t-bond today : Suppose 1-year Treasury bonds yield 1 year from now is 4.00%, 1-year T-bond yield 2 years from now is 5%, and 1-year T-bond 3-year from now is 6%.
Relationship between gender and the participation : A simple random sample of size 10,000 citizens was chosen to study the relationship between gender and the participation in the last election.
Required return on the stock-what is current share price : If the required return on the stock is 14 percent, what is the current share price?
What is the current bond price : The bonds make semiannual payments and have a par value of $1,000. If the YTM on these bonds is 6 percent, what is the current bond price?

Reviews

Write a Review

Financial Management Questions & Answers

  Difference between cash flows and accounting flows

Why do we prepare a capital budget? What is the difference between cash flows and accounting flows within the capital budget process?

  Life is expected with no anticipated value thereafter

A new computer server costs $860,000, delivered and installed. Annual operating costs are $32,000. A five year life is expected with no anticipated value thereafter. Given a required rate of return of 12%, what is the equivalent annual cost of the se..

  What is the price per share of equity under plan

Cooke Co. is comparing two different capital structures. Plan I would result in 8,500 shares of stock and $448,500 in debt. Plan II would result in 12,000 shares of stock and $312,000 in debt. The interest rate on the debt is 9 percent. The all-equit..

  Quoted share price for closed-end fund-share are outstanding

The Argentina Fund has $410 million in assets and sells at a 7.1 percent discount to NAV. If the quoted share price for this closed-end fund is $17.03, how many shares are outstanding?

  What is the company total capitalization

What is the company’s total capitalization? What is the company’s return on capital? What is the company’s after-tax operating income?

  What are some potential pros and or cons of this decision

Interworld Distributors has paid quarterly cash dividends since 1980. The dividends have steadily increased from $.25 per share to the latest dividend declared of $2.00 per share. The board of directors is eager to continue this trend despite the fac..

  Uses the internal rate of return method to evaluate projects

Flynn, Inc. is considering a four-year project that has an initial outlay or cost of $80,000. The future cash inflows from its project are $40,000, $40,000, $30,000, and $30,000 for years 1, 2, 3 and 4, respectively. Flynn uses the internal rate of r..

  How frequently the company should sell the treasury bills

Determine how frequently the company should sell the Treasury bills it owns to cover its day-to-day cash flow needs averaging €15 million a quarter

  Firms debt-equity ratio after the switch

Sewing World had an all equity cost of capital of 12 percent. When the firm switched to being levered its cost of equity increased to 13.4 percent and its pretax cost of debt was 7.5 percent. What was the firm's debt-equity ratio after the switch? Ig..

  Taxes payable for the same year increased

The income statement for Simpson, Inc. indicates that tax expense was $30,000. The balance sheet indicates that taxes payable for the same year increased by $5,000. What amount did Simpson, Inc. actually pay in taxes during this year?

  Unfortunately ran bit over budget-any balances transferred

Your Christmas ski vacation was great, but it unfortunately ran a bit over budget. All is not lost: You just received an offer in the mail to transfer your $14,000 balance from your current credit card, which charges an annual rate of 21.8 percent, t..

  A firm mix of debt and equity is called its

Which of the following is the main reason why a company would prefer issuing debt over equity? A firm’s mix of debt and equity is called its:

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd