Calculate the present value of growth opportunities

Reference no: EM13263103

The market consensus is that SuperSmart Corporation has ROE = 16% and a beta of 1.25, and an expected earnings per share (E1) of $3.16. The market believes that Super Smart Corporation plans to maintain indefinitely its retention ratio (b) of 80%. The expected market return for the coming years is 13%, and risk free assets (10-year Treasury notes) are yielding 5%. (a) Find the intrinsic value estimate of SuperSmart stock according to the constant growth DDM . (b) Calculate the present value of growth opportunities.

Reference no: EM13263103

Questions Cloud

Define the capital asset pricing model : Define the Capital Asset Pricing Model, and then use the CAPM to determine if you should invest in StarPerformance or not and explain your investment decision.

What is the angle of the first order maximum : A 2000 Hz sound wave passes through a wall with two narrow openings 30 cm apart. If sound travels on average 345 m/s, What is the angle of the first order maximum

What is your total return earned for the full three years : Perctange Capital Gain in each year for teh first year that you held the stock, for the second year that you held the stock, and for the third year that you held the stock. If you sold the shares today, what is your total return earned for the ful..

Explain the isomerization of dihydroxyacetone phosphate : The enzyme triose phosphate isomerase catalyzes the isomerization of dihydroxyacetone phosphate. What is the product of this reaction

Calculate the present value of growth opportunities : The market consensus is that SuperSmart Corporation has ROE = 16% and a beta of 1.25, and an expected earnings per share (E1) of $3.16. The market believes that Super Smart Corporation plans to maintain indefinitely its retention ratio.

Determine the power of the modulated signal : An angle-modulated signal with carrier frequency ???ωc=2πx106 is described by the equation φEM(t) =10cos(ωct +0.1sin200πt) (a) find the power of the modulated signal. (b) find the frequency deviation Δf. (c) find the phase deviation ΔΦ.

What is the anguar acceleration of each wheel : A person is riding a bicycle, and its wheels have an angular velocity of 12.1 rad/s. What is the anguar acceleration (in rad/s2) of each wheel

Explain what enzyme is responsible for releasing a glucose : In glycogen degradation, what enzyme is responsible for releasing a glucose molecule attached to the main glucose chain at a branch point

What arbitrage strategy was possible : The three-month forward exchange rate was 1.0300($ per franc). What arbitrage strategy was possible? How does your answer change if the exchange rate is 1.0500($ per franc).

User Account

All Pages