Reference no: EM131185355
In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the “terminal” stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $2.05. The dividends are expected to grow at 14 percent over the next five years. In five years, the estimated payout ratio is 30 percent and the benchmark PE ratio is 39. What is the target stock price in five years?
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What is the minimum price you would accept to sell the bond
: You just started work at a wealth management firm and your boss asks you to evaluate a 30-year bond with a face value of $1,000 that, according to the prospectus, you can purchase next month (01-June-2016) when it is initially issued. If the YTM is e..
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Hybridized discount bond that pays no coupon for two years
: Lofthaven has two bonds outstanding, Series E and Series F Both bonds have face values of $10,000 and, because both bonds are backed by Lofthaven, share a . The Series E is a zero coupon bond with a maturity in 6 years. The Series C, also maturing in..
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Advertising expense and consulting fees revenue
: The following information was taken from the accounting records of ZZ, Inc. for the period ended December 31, 2016: Accounts payable $13,450 Advertising expense 20,625 Consulting fees revenue 93,550 Dividends paid 14,125 Income tax expense 13,095 Ren..
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How much does the lease payment exceed the loan payment
: Ballentine Inc., which has a zero tax rate due to tax loss carry-forwards, is considering a 6-year, $5,000,000 bank loan in order to buy a new piece of equipment. The loan will be amortized over 6 years with end-of-year payments and has an interest r..
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Dividends is to value the dividends over the next five years
: In practice, a common way to value a share of stock when a company pays dividends is to value the dividends over the next five years or so, then find the “terminal” stock price using a benchmark PE ratio. Suppose a company just paid a dividend of $2...
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Holistic holidays limited has an employment contract
: Holistic Holidays Limited has an employment contract with Loretta Bloom, its newly hired CEO. The contract requires a lump sum payment of $1.5 million be paid to Ms. Bloom upon the successful completion of her first three years of service. How much m..
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Firms cost of goods sold and selling expenses
: During the year, Senbel Discount Tire Company had gross sales of $1.17 million. The firm's cost of goods sold and selling expenses were $536,000 and $226,000, respectively. The firm also had notes payable of $910,000. These notes carried an interest ..
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What is addition to retained earnings-net income for firm
: Shelton, Inc., has sales of $390,000, costs of $178,000, depreciation expense of $43,000, interest expense of $24,000, and a tax rate of 40 percent. What is the net income for the firm? What is the addition to retained earnings?
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What was the firms operating cash flow
: During the year, the Senbet Discount Tire Company had gross sales of $1.17 million. The firm’s cost of goods sold and selling expenses were $536,000 and $226,000, respectively. The firm also had notes payable of $910,000. What was the firm’s operatin..
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