Estimate the debt ratio each year for the given years

Assignment Help Finance Basics
Reference no: EM131690199

Question: MiniSink Inc. is a manufacturing company that has $ 100 million in debt outstanding and 9 million shares trading at $ 100 per share. The current beta is 1.10, and the interest rate on the debt is 8%. In the latest year, MiniSink reported a net income of $ 7.50 per share, and analysts expect earnings growth to be 10% a year for the next 5 years. The firm faces a tax rate of 40% and pays out 20% of its earnings as dividends (the treasury bond rate is 7%).

a. Estimate the debt ratio each year for the next 5 years, assuming that the firm maintains it current payout ratio.

b. Estimate the debt ratio each year for the next 5 years, assuming that the firm doubles its dividends and repurchases 5% of the outstanding stock every year.

Reference no: EM131690199

Questions Cloud

Produce the collection of sets : COP 4020 Assignment cparse. Read in a start symbol of a set of productions followed by set of productions from stdin and produce collection of sets of LR(0)
Estimate the debt ratio for iou if it eliminates dividends : IOU Inc. has $ 5 billion in debt outstanding (carrying an interest rate of 9%), and 10 million shares trading at $ 50 per share.
Level of connectivity for both society and businesses : Although there are a number of benefits to this level of connectivity for both society and businesses,
Nectar in a sieve : Respond to the following in the form of a short essay. Your essay should consist of at least five paragraphs.
Estimate the debt ratio each year for the given years : MiniSink Inc. is a manufacturing company that has $ 100 million in debt outstanding and 9 million shares trading at $ 100 per share.
List websites that would be appropriate for teaching : Various studies have shown that most educators do not know how to properly evaluate websites though they are being used in classrooms daily.
Effective management of information systems : Effective management of information systems and supply chain management can provide an enduring competitive advantage to a retailer.
Successful application of big data in financial industry : Conduct a search on a successful application of big data in the financial industry and give a brief summary of the selected article.
Explore a personal connection or tie-in to the passage : In 200-250 words, explore a personal connection or tie-in to this passage. What relevance does this passage have for you, your life, our world?

Reviews

Write a Review

Finance Basics Questions & Answers

  Inflation and interest rates

What would you expect the nominal rate of interest to be if the real rate is 3.9percent and the expected inflation rate is 7.4?percent?

  Explain the basic difference between debt and equity

Sometimes it is not clear if a particular security is a debt or equity. Explain the basic difference between debt and equity.

  Price per share should the ortega stock sell

Investors require a rate of return of 14%. At what price per share should the Ortega stock sell?

  How does commercial paper differ from a normal bank loan

Explain why we record interest in the period in which we incur it rather than in the period in which we pay it.

  Calculate the net present value (npv)

Calculate the net present value (NPV), Indicate whether to accept or reject the machine, and Explain your decision.

  Ethical considerations that might impact decisions

What does it mean that managers should maximize shareholder wealth "subject to ethical constraints"? What are the ethical considerations that might impact decisions that result in cash flow and price effects that are less than they might otherwise..

  If comparable yields are 75 percent what must be the price

question a firm has the following preferred stocks outstandingbullpfd a 32 annual dividend 1000 par value no

  Average interest rates charged by commercial banks

Find average interest rates charged by commercial banks on new automobile loans, personal loans, and credit card plans.

  Under what circumstances would the risk-free rate change

under what circumstances would the risk-free rate change? what impact would a change higher or lower have on the cost

  What will be the value of the company

The cost of equity is 12%. What will be the value of equity of the firm? What will be the value of the company if it has a debt of $7.5 million?

  Significant investments in several opportunities

The Allied Group intends to expand the company's operation by making significant investments in several opportunities available to the group.

  Define the principles of evolution

Pretend you are hiking down through the Grand Canyon or another area rich in fossils. How do the fossils you see provide evidence for Darwin's idea of "descent with modification", or evolutionary theory? In your response, be sure to define the..

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