Calculate the present value of these cash flows

Assignment Help Financial Management
Reference no: EM131341780

Suppose that a firm’s recent earnings per share and dividend per share are $3.30 and $2.30, respectively. Both are expected to grow at 9 percent. However, the firm’s current P/E ratio of 32 seems high for this growth rate. The P/E ratio is expected to fall to 28 within five years. Compute the dividends over the next five years. (Do not round intermediate calculations. Round your final answer to 3 decimal places.) Dividends Years

First year $

Second year $

Third year $

Fourth year $

Fifth year $

Compute the value of this stock in five years. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Stock price $

Calculate the present value of these cash flows using an 11 percent discount rate. (Do not round intermediate calculations. Round your final answer to 2 decimal places.)

Present value $

Reference no: EM131341780

Questions Cloud

Best measure of the total risk in a portfolio : Which of the following is the best measure of the total risk in a portfolio? Which of the following investment classes had the leas average based on historical data?
Writes the file content to another file : Write a method that takes as a parameter the name of a binary file, reads the content of the file and returns it as an array of bytes. Write a method that writes the file content to another file. Compare both files.
Straight-line depreciation to zero over six-year life : Which of the following securities is most liquid and has the least default risk? Consider a 6-year project with the following information: initial fixed asset investment = $400,000; straight-line depreciation to zero over the 6-year life;
How engineering code of ethics is relevant to case study : Describe how the Engineering Code of Ethics (Links to an external site.) is relevant to this particular case study. What responsibility did the design engineers have in the deaths described in the case study?
Calculate the present value of these cash flows : Suppose that a firm’s recent earnings per share and dividend per share are $3.30 and $2.30, respectively. Both are expected to grow at 9 percent. However, the firm’s current P/E ratio of 32 seems high for this growth rate. Compute the value of this s..
Agent based e-learning solution : Do a datailed study of the Case Study - Chapter 10 "Agent Based E-Learning Solution" and prepare a group report considering the groups created during lecture. Submit your report in A4 printed paper.
Write a movie review about i shot andy warhol : Write a Movie Review about I Shot Andy Warhol. You must write at least a full two page movie review. Please include the following information in your review.
Discuss how business process design works : For the Portfolio Project in this course, you will discuss how business process design works. To provide examples of the concepts you will explain, use the company you work for or, if you are not currently employed, any company you choose to resea..
What about that story caught your attention : Which story did you like the best? Or, which did you find the most intriguing? What about that story caught your attention? What are you still thinking about? What did you highlight or underline?

Reviews

Write a Review

Financial Management Questions & Answers

  What gives rise to the currency exposure at aifs

What gives rise to the currency exposure at AIFS? What are the two random variables that Archer-Lock and Tabaczynski have to deal with?

  Residual distribution policy with distributions as dividends

Puckett Products is planning for $4.5 million in capital expenditures next year. Puckett's target capital structure consists of 45% debt and 55% equity. If net income next year is $2.7 million and Puckett follows a residual distribution policy with a..

  Find out the data rates and costs of t carrier services

Find out the data rates and costs of T carrier services in your area. -  Find out the data rates and costs of packet-switched and dedicated-circuit services in your area.

  What is the smallest expected gain over the next year

A stock has an annual return of 10.4 percent and a standard deviation of 41 percent. What is the smallest expected gain over the next year with a probability of 1 percent?

  Retention ratio-what is the profit margin

A firm has a retention ratio of 49 percent and a sustainable growth rate of 7.80 percent. The capital intensity ratio is 1.73 and the debt-equity ratio is .84. What is the profit margin?

  Arbitrage strategy that yields a risk-less profit

Suppose the forward rate satisfies f(0, T1, T2) > [B(0,T1) / B(0,T2)] - 1. Write down, showing all details, an arbitrage strategy that yields a risk-less profit of (1 + f(0, T1, T2)) - B(0,T1) / B(0,T2) dollars.

  Use the present worth-annual worth and capital iced cost

A job can be done with Machine A that costs $12,500 and ha annual end-of-year maintenance costs of $5000; it salvage value after g years is $2,000. Or the job can be done with Machine B, which cost $15,000 and has end-of year maintenance costs of $4,..

  What type of risk was measured and accounted

What type of risk was measured and accounted for in Parts b and and should this be of concern to the hospital's managers?

  Term life insurance policy

You buy a $ 10, 000 term life insurance policy. Under a 20-year term life policy, if you die within a twenty-year period from issuance the policy will pay. According to the life tables 95377 of 98437 20 year olds live to be 40. What should you expect..

  Discuss 2 methods that can be used by risk managers

Discuss 2 methods that can be used by risk managers to forecast the avarge less associated with particular loss exposure, assuming that the firm has large date base of prior losses.

  Produce table and graph for the price per barrel airlines

Imagine that Segal Air entered into a forward contract (forward price of $105) for half of their 2017 fuel needs and bought calls (strike of $120 and premium of $10). Produce the table and graph for the price per barrel the airlines will pay as a fun..

  Calculate the npv and eac for each machine

Vandalay Industries is considering the purchase of a new machine for the production of latex. Machine A costs $3,102,000 and will last for six years. Variable costs are 40 percent of sales, and fixed costs are $245,000 per year. Calculate the NPV for..

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