Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
PKG Labs is a leading pathology provider and its shares are listed on the Australian Stock Exchange. In the year just ended, PKG Lab's net income was $15 million and the plowback ratio was 60%. To maintain its current growth, PKG Lab has decided to keep its plowback ratio constant for the next 4 years. PKG Lab's net income is expected to grow at a rate of 8% for the next 4 years. After 4 years, PKG Lab will reduce its plowback ratio to a constant rate of 20% and the net income will grow at a sustainable rate of 3% thereafter. PKG Lab is currently traded at $15 per share and has a beta of 0.8. The number of shares outstanding is 10 million. The company's cost of unlevered cash flow is 8.5%, and the cost of equity based on the CAPM is 10%. The expected market risk premium is 11%.
a) What is the intrinsic value of the PKG Lab's share price using the Dividend Discount Model? What is your investment advice based on the intrinsic value? (to two decimal places)
b) What is the present value of growth opportunity based on the intrinsic value calculated in part a)? (to two decimal places)
c) If you have changed your forecast on the market risk premium to 10%, what is the revised expected return of investing in PKG Lab for the next year based on CAPM? (to two decimal places)
d) What is the P/E ratio at the end of the fourth year from now (at the beginning of year 5)? (to two decimal places) Which stage of industry lifecycle will PKG be in after 4 years?Support your explanation with relevant numbers.
During the past year, the company issued 10.5 million shares of new stock at a total price of $59 million, and issued $35.5 million in new long-term debt.
You are a dual-income, no-kids family. You and your spouse have the following debts (total): mortgage, $200,000; auto loan, $10,000; credit card balance.
Bob is the mortgagee in a mortgage recorded on 1/31/1996 on the property at 1000 North Main Street in the amount of $7,500,000.
You have the following information on Universe It Ts, Inc.: sales to working capital = 19 times, profit margin = 26.9%, net income available to common stockholders = $4.9 million, and current liabilities = $1.9 million. What is the firm's balance ..
Calculate the lowest possible average cost of capital for Brachman if the firm raises $30 million.
a stock has an expected return of 15.5 percent its beta is 1.65 and the expected return on the market is 12.6 percent.
Show that the bondholders are better off and the stockholders are worse off in the combined firm than they would have been if the firms had remained separate.
Why would a companys costs of manufacturing and procurement tend to increase as the firm changes from an MTP to an MTO strategy?
metasteel limited co. has a stable sales track record but does not expect to grow in the next several years. its last
What is the proper cash flow to use to evaluate the present value of the introduction of the new chip?
Woidtke manuffacturing's stock currently sells for $20 a share. The stock just paid a dividend of $1.00 a share, ad the dividend is expected tp grow forever at a constant rate of 10% a year. What is the required rate of return on Woidtke's stock?
Calculate the expected rate of return of the 30-year bond over the five-year period. (Do not round intermediate calculations. Round your answer to 2 decimal pla
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd