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Assume Gillette Corporation will pay an annual dividend of $0.62 one year from now. Analysts expect this dividend to grow at 11.9% per year thereafter until the 6th year. Thereafter, growth will level off at 2.1% per year. According to the dividend-discount model, what is the value of a share of Gillette stock if the firm's equity cost of capital is 7.2%?
Fama's has a WACC of 9.8%. The company's cost of equity is 13%, and its cost of debt is 6.5%. The tax-rate is 35%. What is Fama's of debt-equityratio?
If the company goes beyond 30 percent debt, its bonds would carry a lower rating and a much higher coupon because the possibility of financial distress and the associated costs would rise sharply. Volcan has a 40 percent corporate tax rate.
A. Margo is considering expansion of its facilities. Use the SML to determine the cost of equity. B. Compute the WACC for Margo.
Explain in term of inputting the numbers into a financial calculator
Calculate the present value of cash inflows associated with each project. Select the optimal group of projects, keeping in mind that unused funds arecostly.
Define each of the following terms:a. Working capital; net working capital; net operating working capital b. Inventory conversion period; receivables collection period; payables deferral period; cash conversion cycle.
The other alternative is the purchase of a supermarket chain, also costing $100 million. It too, has an expected net present value of $20 million. The firms management is interested in reducing the variability of its earnings.
Sorenson Corp.'s expected year-end dividend is D1 = $1.60, its required return is r = 11.00%, its dividend yield is 6.00%, and its growth rate is expected to be constant in the future. What is Sorenson's expected stock price in 7 years, i.e., what is..
We have applied the formula to calculate the contribution margin method of determining target operating income, and have arrived at a numerator amount of $30,000 (20,000 plus 10,000) and a denominator amount of $200 (500 minus 300). (3) These figu..
Computation of value of cost of loan from bank and a bank account that pays 5% per year (EAR) for three years
Explain the strategy adopted by the company in your answer define the terms ‘cum-dividend' and ‘ex-dividend' - Calculate the theoretical price of the share after the bonus issue and the dividend payment have occurred.
It is desired to use a 0.75-m diameter beach ball to stop a drain in a swimming pool. Obtain an expression that relates the drain diameter D and the minimum water depth h for which the ball will remain in place.
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