Estimate of the value of a share of the firm

Assignment Help Finance Basics
Reference no: EM132481151

Linkedina has a ROE of 20% that is expected to stay like that for years 1 to 3. In year 4 the ROE is expected to change to 12% (for both new and old projects) and stay there forever. The firm's stock has just paid a dividend of 3 AUD and the retention ratio is 25%. Assume the retention ratio is held constant forever and the opportunity cost of equity capital is 14%. What is your estimate of the value of a share of the firm? Choose the closest number unless you think it cannot be determined.

Reference no: EM132481151

Questions Cloud

Prepare the stockholders equity section : Prepare the stockholders equity section of the combined company's balance sheet. assuming Pumpworks acquires all of Seaworthy's net assets
Describe the born-oppenheimer approximation : What spin function(s) is/are associated with this spatial function? What is the multiplicity of a state with this spatial function?
Prepare and journalize the transactions : Buildings are estimated to have 50 year life and no salvage value. Equipment have 10 year useful life. Prepare and Journalize the transactions
Generate a perpetual stream of cash flows : Growth Enterprises believes its latest project, which will cost $54,963to install, will generate a perpetual stream of cash flows. Cash flow at the end of the f
Estimate of the value of a share of the firm : What is your estimate of the value of a share of the firm? Choose the closest number unless you think it cannot be determined.
Estimate of the value of a share of the firm : What is your estimate of the value of a share of the firm? Choose the closest number unless you think it cannot be determined.
Stock price the analyst should expect now : If the company's last annual earning is $10 per share, what's the stock price the analyst should expect now?
What is the firms net income after taxes : Operating activity of $348,461,25. Assuming there are no cash revenues recorded on the income statement, what is the firms net income after taxes?
Determine what factors contributed to the silence : Determine What factors contributed to his silence? Assuming he wanted to act ethically, how could he have given voice to his concerns?

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the net cash flow from the salvage value

Ronnie has been offered $52,000 for his old assets. What is the net cash flow from the salvage value if the tax rate is 34 percent?

  Estimate the firm value using two possible assumptions

You are evaluating the potential purchase of a small business currently generating $46,500 of after-tax cash flow (D0equals=$46,500).

  Us treasury bills yielded 38 percent and the inflation

last year isaac earned 10.6 percent on her investments while u.s. treasury bills yielded 3.8 percent and the inflation

  Describe a working model of the insurance cycle

Describe a working model of the insurance cycle and the steps to manage the insurance cycle.

  Discuss the assumptions of the capm

Discuss the assumptions of the CAPM. Explain the usefulness of the CAPM and some reasons that it has been criticized over the years.

  How many shares of stock must plasti-tech sell

The underwriters' spread is 6.5 percent. How many shares of stock must Plasti-tech sell to meet its financing need?

  Index at the time of acquisition

When restating nonmonetary asset accounts, the price index at the current date represents the price index from which the conversion is made

  Looming social security insolvency issue

What do you think is the best approach to deal with the looming Social Security insolvency issue? What are its pros and cons?

  Consider the given situations for shocker

On November 28, 2012, Shocker receives a $3,000 payment from a customer for services to be rendered evenly over the next three months.

  Net present value and the internal rate of return approaches

When is it possible for the net present value and the internal rate of return approaches to give conflicting rankings of mutually exclusive investment projects?

  What is the total present value of the cash flows received

using the time value of money to compute the present and future values of single lump sums and annuities use the

  Explain a credit default swap

Explain a credit default swap, an interest rate swap, or a currency swap. Give an example of when your choice could be used to mitigate risk. Provide an Internet reference other than Wikipedia, Investopedia, and similar sites.

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