Calculate the present value of these cash flows

Assignment Help Financial Management
Reference no: EM131957979

Suppose that a firm's recent earnings per share and dividend per share are $2.80 and $1.90, respectively. Both are expected to grow at 11 percent. However, the firm's current P/E ratio of 20 seems high for this growth rate. The P/E ratio is expected to fall to 16 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 price 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 a 13 percent discount rate. (Do not round intermediate calculations. Round your final answer to 2 decimal places.) Present value.

Reference no: EM131957979

Questions Cloud

Estimate that the equipment can be sold as salvage : A company is considering a 3-year project that requires an initial installed equipment cost of $11,000. The project engineer has estimated that the operating.
What level of pretax cost savings-MACRS schedule : A proposed cost-saving device has an installed cost of $830,000. What level of pretax cost savings do we require for this project to be profitable?
How can management eliminate or reduce agency cost : How can management eliminate or reduce this agency cost? How might management eliminate this agency cost?
Calculate the price of bond : Assuming annual coupon payments, calculate the price of the bond.
Calculate the present value of these cash flows : Calculate the present value of these cash flows using a 13 percent discount rate.
What is the margin and will there be margin call : The price of the stock rises to $ 28.49 per share. What is the margin and will there be a margin call?
Current exchange rate between us dollar and japanese yen : The current exchange rate between the U.S. dollar and the Japanese yen is 113?(yen/$). That? is, 1 dollar can buy 113yen.
What is the investor new margin position : Assume that an investor buys 100 shares of stock at $ 54 per share, putting up a 55 % margin. what is the investor's new margin position?
Firm operating return on assets and return on equity : Calculate the? firm's operating return on assets and return on equity.

Reviews

Write a Review

Financial Management Questions & Answers

  Estimate the costs of debt and equity capital

Washington Paper Company has estimated the costs of debt and equity capital for various proportions of debt in its capital structure as follows-

  Assessing return and risk-standard deviation of the returns

Compute the standard deviation of the returns. Compute the coefficient of variation of the returns.

  What is accrued interest

If the coupon rate for this corporate bond is 6% and the par value of the issue purchased is $1,000, what is the accrued interest?

  What is its net income

Y3K, Inc., has sales of exist6,329, total assets of exist2,945, and a debt-equity ratio of 1.40. If its return on equity is 14 percent, what is its net income?

  What is the reward-to-volatility ratio for the equity fund

What is the reward-to-volatility ratio for the equity fund?

  Calculate the project initial cash outlay

Tomatoes inc. is planning a project that involves machinery purchases of $100,000. calculate C0, the project's initial cash outlay.

  What is so ominous about the combination of events ben sees

What is so ominous about the combination of events Ben sees? What course of action, if any, should Ben take?

  Equation to forecast broussard additional funds

Use the AFN equation to forecast Broussard's additional funds needed for the coming year.

  Calculate the monthly payments on both loans

You have secured a loan from PNC Bank for two years to build a new business location. The terms of the loan are that you will borrow $125,000 now and an additional $25,000 in one year. Interest of 10 percent APR will be charged on the balance monthly..

  Find internal rate of return for series of future cash flow

Find the internal rate of return (IRR) for the following series of future cash flows.

  What are the forward and rotational speeds

With a model 041 m in diameter, a forward speed of 2.58 m/s and a rotational speed of 450 rpm is recorded. What are the forward and rotational speeds corresponding to a 2.45-m diameter prototype?

  Describe the application of the treasury stock method

What is the treasury stock method and when is it used? Briefly, describe the application of the treasury stock method.

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