Calculate the present value of growth opportunities

Assignment Help Financial Management
Reference no: EM131300084

Parcel Corporation Company plans $10 dividend next year (100% of earnings). Instead, company plows back 30% of earnings (i. e plowback ratio Is 30% and payout ratio is 1-30% = 70% and dividend payment is $7 = 70%* 10) at firm's current return on equity of 25% (forever). The required rate of return on the stock is 13%, calculate the present value of growth opportunities. See slides page 41-42 as an example.

Reference no: EM131300084

Questions Cloud

How much interest will you earn over the life of the loan : You are lending your friend $25,000. She agrees to repay the loan in equal quarterly payments over a three-year period at an interest rate of 8% compounded quarterly. Using excel functions, answer the following: Set up an amortization schedule for a ..
What are some uses and limitations of financial ratios : How do you think financial ratios differ across different industries? Compare two industries of your choice and select a few ratios and explain whether you think the ratios would be higher or lower for each of those industries and explain why. What a..
Find zero coupon bond with a par value : You find a zero coupon bond with a par value of $10,000 and 22 years to maturity. The yield to maturity on this bond is 4.4 percent. Assume semiannual compounding periods. What is the price of the bond?
Difference between interest rate risk and reinvestment risk : Explain the difference between interest rate risk and reinvestment risk. rank the following types of securities in order of both interest rate risk and reinvestment risk, with 1 being the lowest and 3 being the highest.
Calculate the present value of growth opportunities : Parcel Corporation Company plans $10 dividend next year (100% of earnings). Instead, company plows back 30% of earnings (i. e plowback ratio Is 30% and payout ratio is 1-30% = 70% and dividend payment is $7 = 70%* 10) at firm's current return on equi..
Annual interest with two repayment options : You are given the opportunity to borrow $10,000 for 36 months at 12% ANNUAL interest with two repayment options: Pay interest only (no principal) at the end of each month with full repayment of principal (the amount borrowed) at the end of the 36 mon..
What is the company break-even point : A company has a cost of goods of 60% of the selling price of its products. It has $200,000 in fixed overhead for administrative expenses, rent and salaries. In addition, it spends 18% of every sales dollar on marketing. What is the company’s break-ev..
Aftertax cost of debt and yield on new issue : Airborne Airlines Inc. has a $1,000 par value bond outstanding with 20 years to maturity. The bond carries an annual interest payment of $116 and is currently selling for $820. Airborne is in a 20 percent tax bracket. Compute the yield to maturity on..

Reviews

Write a Review

Financial Management Questions & Answers

  Foreign company acquisition

Acquisition by a foreign company and the effects of that decision and the results of foreign exchange in Euro and the exchange rate differences.

  Financial management for profit and non profit organizations

In this essay, we are going to discuss the issues of financial management in a non-profit organisation.

  Method for estimating a venture''s value

Evaluate venture's present value, cash and surplus cash and basic venture capital.

  Replacement analysis

This document show the Replacement Analysis of modling machine. Is replacement give profit to company or not?

  Business finance task - capital budgeting

Your company is considering using the payback period for capital-budgeting. Discuss the advantages and disadvantages of this technique.

  Analysis of the investment

In this project, you will focus on one of these: the additional cost resulting from the purchase of an apple press (a piece of equipment required to manufacture apple juice).

  Conduct a what-if analysis

Review the readings and media for this unit, including the Anthony's Orchard case study media. Familiarise yourself with the Anthony's Orchard company and its current situation.

  Determine operational expenditures

Organisations' behaviour is guided by financial data. In the short term, such data will help determine operational expenditures; in the long term, historical data may help generate forecasts aimed at determining strategic plans. In both instances.

  Personal financial management

How much will you have left over each half year if you adopt the latter course of action?

  Sources of finance for expansion into new foreign markets

A quoted company is considering several long-term sources of finance for expansion into new foreign markets.

  Long term financial planning

This assignment is designed for analyze Long term financial planning begins with the sales forecast and the key input in the long term fincial planning.

  Explain the role of fincial manager

This assignment explain the role of fincial manager, function of manger. And what are the motives of financial manager.

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