Determine whether it is undervalued or overvalued

Assignment Help Financial Management

Reference no: EM13932634

A manager believes his firm will earn an 18% return next year. His firm has a beta of 1.75, the expected return on the market is 13% and the risk free rate is 5%. Compute the return the firm should earn and determine whether it is undervalued or overvalued.

Reference no: EM13932634

Questions Cloud

Good cash flow estimates be as part of investment equation : Assume that you are the CFO of a local YMCA. You and your administrative team are considering making an investment in a day care facility to meet the ongoing child care needs of your members. What would your decision be if the NPV were negative? What..

Service department charges in divisional income statements : Service Department Charges In divisional income statements prepared for Mills Construction Company, the Payroll Department costs are charged back to user divisions on the basis of the number of payroll checks, and the Purchasing Department costs are ..

Describe state health department emergency preparedness : Explain the role you might play on the team given your professional health track and preparation (health educator or public health practitioner). Why is this role important? What would happen if no one fulfilled this role?

What is the patient or customer value proposition : Research a hospital or health system and review their website and advertising. Who is their target audience? What is the patient/customer value proposition

Determine whether it is undervalued or overvalued : A manager believes his firm will earn an 18% return next year. His firm has a beta of 1.75, the expected return on the market is 13% and the risk free rate is 5%. Compute the return the firm should earn and determine whether it is undervalued or over..

Dedicated to circuit board design and fabrication : Nordique Fab is an Arizona company dedicated to circuit board design and fabrication. It has acquired new stations and software for its three facilities at a cost of $450,000 per site. The estimated MV for each system the fourth year is expected to b..

Discussions of genetics and human behavior : Until recently, the "nature vs. nurture" argument has dominated social work discussions of genetics, human behavior, and development. For this week's discussion: Discuss why this argument is too simplistic and reductionistic to reflect current knowl..

Firm been decreased by the expected bankruptcy costs : Custer's has bonds outstanding with a face value of $162,000 that are selling at par. It also has 10,000 shares of stock outstanding that are selling for $32.30 a share. The all-equity value of the firm is $455,000. The tax rate is 35 percent. By wha..

What is the market value of the firm : Bart's Mart will have a value of $41,000 if the economy does well this next year and a value of $32,000 if the economy does poorly. The probability of a good economy is 65 percent. The firm owes its bondholders $12,000. What is the market value of th..

User Account

All Pages