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Consider Pacific Energy Company and U.S. Bluechips, Inc., both of which reported earnings of $750,000. Without new projects, both firms will continue to generate earnings of $750,000 in perpetuity. Assume that all earnings are paid as dividends and that both firms require a 14 percent rate of return. Required: (a) What is the current PE ratio for each company? Pacific Energy Company: U.S. Bluechips, Inc.,: (b) Pacific Energy Company has a new project that will generate additional earnings of $100,000 each year in perpetuity. Calculate the new PE ratio of the company. PE ratio times (c) U.S. Bluechips has a new project that will increase earnings by $200,000 in perpetuity. Calculate the new PE ratio of the firm. PE ratio times.
Alculate the liquidity, efficiency, financial leverage and profitability ratios for the company for 2011 and 2012 and the competitor for 2012.
The yearly sales for Salco Corporation. were $4.5 million last year. The company end-of-year balance sheet was as follows:
A corporation has just been taken over through new management which believes that it can raise earnings before taxes from $600 to $1,000, merely by cutting overtime pay and thus decreasing cost of goods sold.
Winter Corporation is expected to pay a dividend or $4.00 per share out of earnings of $7.50 per share. If the required rate of return on the stock is 15 percent and dividends are growing at a current rate of 10% per year.
You can either spend spring break working at home in Alabama for dollar 100 a day for 5 days, or you can spend the week in Costa Rica where travel expenses will total dollar 800.
Find out the present value of a perpetuity of $100 per year if the appropriate discount rate is 7%?
Find what is this offer worth to you today at a discount rate of 8% - npv or CF function or timeline
The firm expects to operate the machine for 4 years and then to sell it for $12,500. If the marginal tax rate is 40%, what will the after-tax salvage value be when the machine is sold at the end of Year 4?
Pulp Paper Corporation and Holt Paper Corporation are able to generate earnings before interest and taxes of $150,000.
Compare, contrast, and discuss the relative profit and risk associated with the stock and the option transactions?
If the firm's tax rate is 30% what discount rate should you use to evaluate the equipment purchase?
Dividends and retained earnings. Suppose the firm in problem 2 paid out $56,000 in cash dividends. What is the addition to retained earnings?
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