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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 $1.24. The dividends are expected to grow at 19 percent over the next five years. The company has a payout ratio of 35 percent and a benchmark PE of 19. The required return is 11 percent.
What is the target stock price in five years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Target price in 5 years $
What is the stock price today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Stock price today $
Pick a bank or financial services firm you would like to analyze.- also identify a competitor that is similar in size and operations.
_____ is often used by manufacturers to significantly lower their production cost. It gives them the ability to produce in a level production mode year round, rather than running two or three shifts at the peak of their demand cycle.
If the returns on Stock A are as follows: Year 1 return = -2 %, Year 2 return = -20 %, Year 3 return = 20 %, Year 4 return = -17 %, and Year 5 return = -13 %, what is the average return for Stock A over this 5 year period?
What is the portfolio value trigger point at this time that would require the manager to immunize the portfolio?
Which of the following is an example of a firm's capabilities?
Analyse the capital structure of I Icy. lot-Packard using both the debt ratio and interest-bearing debt ratio.
You borrow a $328,000 add-on interest loan from the credit union and will repay in equal installments over 19 years. The nominal rate of interest is 4.5 %. Assuming daily repayment and compounding rate of interest, obtain the annual percentage rate. ..
A stock index is currently 2,500. Its volatility is 30%. The risk-free rate is 5% per annum (continuously compounded) for all maturities and the dividend yield on the index is 1%. Calculate values for u, d, and p when a six-month time step is used. W..
Crosby Industries has a debt–equity ratio of 1.2. Its WACC is 13 percent, and its cost of debt is 4 percent. There is no corporate tax. What is the company’s cost of equity capital? What would the cost of equity be if the debt–equity ratio were .5?
What does asset liablity management role for banks? and for pension funds?
You are bullish on Telecom stock. What will be your rate of return if the price of Telecom stock goes down by 8% during the next year?
Assuming a discount rate of 8%, calcualte the net present value of the aftertax benefits. Sandras life expectancy is 20 more years, and she could receive an annuity of $35,000 a year for the next 20 years. Because her annual income would be relat..
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