Reference no: EM13212563
Find the value per share of the company'scommon stock ( the company had paid out a total of $1,500,000 in dividends (the number of share outstanding is 1 million ). In the company require return on 25% and the constant growth rate of 20%.), the CFO ask you the following ?
1.What should the per share value of the company's common stock be ? (dividends will continue to grow at a constant rate)
2. If the company will continue to grow at 20% for the next five years. After that, it is forecasted that growth rate will belower to 10%. This growth rate will then be sustained indefinitely. Based on this what is the company's common stock value per share?
3. The CFO is satisfied with your research, but, he is worried as the technology being developed carries more risk. He wants to know if the current discount rate of 25% is suitable. What will you tell him?
4. The company has issued bonds as well for long-term financing reasons. Today the bond is selling at a discount of $95.91 ($100 par value) on the open bond market. The bond makes semi-annual coupon payments at a coupon rate of 6%, and will mature in 5 years. A friend does not understand why the bond is selling for less than its par value. How would you explain this to him? Support your explanation by including the equation for how the market price would be calculated. What is the current market rate expressed on an annual basis?
5. If the company were considering issuing a new bond today, explain what coupon rate the firm should theoretically offer. Assume the newly issued bond would have the same characteristics of the previously issued one.
|
Calculate eco s current cost of preferred stock
: Calculate Eco s current after-tax cost of long-term debt, calculate Eco s current cost of preferred stock
|
|
Determine the force required to pull the wedge out
: A 9º wedge is inserted using a force of 1000 lbs. The static coefficient of friction between the wedge and the log is 0.50. Determine the force required to pull the wedge out.
|
|
Calculate the rocket power
: rocket boosts the speed of a spacecraft from 7500 m/s to 10 500 m/s with a thrust of 890 kN. Calculate the rocket power.
|
|
Calculate the net heat flow and the overall change
: The piston is then move in,and heat is rejected bt the air reversibly at constant pressure until the volume is the same as it was initially.Calculate the net heat flow and the overall change of entropy.sketch the process of p-V and T-s diagram.
|
|
Current market rate expressed on an annual basis
: What should the per share value of the company's common stock be and what is the current market rate expressed on an annual basis?
|
|
Determine the initial discharge rate of water
: The tank air pressure above the water level is 300kPa(absolute) while the atmospheric pressure is 100kPA. Neglecting frictional effects, determine the initial discharge rate of water from the tank.(Density of water=1000kg/m^3)
|
|
Determine the surface temperature of the component
: A 0.4 W cylindrical electronic component with a diameter of 0.3 cm and length 1.8 cm is mounted horizontally on a circuit board. To cool the component air is flowing across the board at a velocity of 150 m/min. If the air temperature is T∞= 45°C, ..
|
|
Determine be naturak frequency of the system
: A 0,5Kg mass attached linear spring suffress 01 N/m. Determine be naturak frequency of the system in hortz e reapert this calculation for a mass of 50Kg and a suffress of 10N/m and compare your result to that of part.
|
|
Calculate byfields cost of capital
: Calculate Byfields cost of capital. Which projects should Byfield accept and briefly explain why knowing the cost of capital is important for a company.
|