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Suppose that Tractor Supply Company’s stock (TSCO) is selling for $67.00. Analysts believe that the growth rate for Tractor will be 15% next year, 20% for the following two years, and thereafter the growth rate will be 8% indefinitely. Due to its growth, Tractor will not pay a cash dividend until two years from now. At that time, the dividend per share will be $2.00. Thereafter the dividend will grow by the same rate as the company. Stockholders require a return of 18 percent on Tractor’s stock.
Required:
a) Based on the above assumptions, determine the price of Tractor’s common stock.
b) Explain whether an investor should buy the stock.
In its first year, Joe’s Start-Up Company’s first year projections indicate revenues of $125,000 and Cost of Goods Sold (CGS) of $81,250, which will be the ONLY variable cost. Depreciation will be $20,000, and cash interest on seed stage loans will b..
DAA's stock is selling for $15 per share. The firm's income, assets, and stock price have been growing at an annual 15 percent rate and are expected to continue to grow at this rate for 3 more years. No dividends have been declared as yet, but the fi..
You borrow $5,900 at 10% per year and will pay off the loan in three equal annual payments starting 1 year after the loan is made.
This stock pays dividend payment of $3 each in first year and second year, respectively. What is the value of this forward contract?
Calculate the following ratios for Apple company-Accounts payable turnover Ratio and Account Payment period
American Pulp Corp. (APC) has entered into a contract to harvest timber for $450,000. The total estimated available harvest is 150 million board-feet. What is the depletion allowance for years 1 to 3, if 42,45, and 35 million board-feet are harvested..
What nominal rate of return do you require when there is semi-annual compounding?
From the above data, develop a pro forma statement for a base year showing net operating income (NOI) for Summer Place.
What is the project's expected NPV, its standard deviation, and its coefficient of variation? Enter your answers for the NPV and standard deviation in millions.
Ace Industries has current assets equal to $10 million. The company's current ratio is 2.5, and its quick ratio is 2.0. What is the firm's level of current liabilities? What is the firm's level of inventories?
Consider a project to supply 100 million postage stamps per year to the U.S. Postal Service for the next five years. You have an idle parcel of land available that cost $1,900,000 five years ago; if the land were sold today, it would net you $2,100,0..
The option seller, also called the option writer, sells (or writes) the option and has a short position in the contract. When the exercise price of an option is equal to the current price of the stock, the option is said to be at-the-money. A holder ..
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