Present value of its growth opportunities

Assignment Help Financial Management
Reference no: EM131896741

A company has expected earnings of $3 per share for next year. The firm's ROE is 20%, and its earnings retention ratio is 70%. If the firm's market capitalization rate is 15%.

1) What is the present value of its growth opportunities?

2) What is the stock’s P/E ratio?

Reference no: EM131896741

Questions Cloud

Issued perpetual preferred stock : Earley Corporation issued perpetual preferred stock with a 10% annual dividend.
What does the market believe will be the stock price : Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years?
Forward premium or discount of the brazilian real : Assuming the existence of interest rate parity, determine the forward premium or discount of the Brazilian Real
Set up private cemetery business : The Yurdone Corporation wants to set up private cemetery business. The company is somewhat unsure about assumption of 5 percent growth rate in its cash flows.
Present value of its growth opportunities : A company has expected earnings of $3 per share for next year. What is the present value of its growth opportunities?
Nonconstant growth-stock expected to grow after year three : Carnes Cosmetics Co.'s stock price is $48.27, and it recently paid a $3.00 dividend. At what constant rate is the stock expected to grow after Year 3?
What is the value of the lease : The annual depreciation tax shield is $1,760 and the after-tax annual lease payment is $6,800. What is the value of the lease?
How much cash was spent during year related to restructuring : How much cash was spent during the year related to restructuring?
Valuation of a constant growth stock : What is its value if the previous dividend was D0 = $2.25 and investors expect dividends to grow at a constant annual rate of (1) -7%,

Reviews

Write a Review

Financial Management Questions & Answers

  What return are they earning for investors

Fox Woodworking Inc. issued preferred shares at a face value of $48 to yield 5% 10 years ago. The shares are currently selling at $62. What return are they earning for investors who buy them today?

  Corporation has already sponsored soft launch

A corporation has already sponsored a soft launch of a new suite of software among select customers, and now they are trying to decide their next steps. The expense of the soft launch is called a (an)

  Major company with significant investment in smaller firms

Your client, Everest Corporation, is a major company with significant investment in smaller firms.

  What was the net asset value of fund at beginning of year

The fund has issued 100 million of its own shares to investors. What was the net asset value of the fund at the beginning of the year?

  Debt proceeds are used to repurchase equity

Marcos & Sons has no debt. Its current total value is $13 million. What will the company's value be if it sells $5 million in debt and has a tax rate of 35 percent? Assume all debt proceeds are used to repurchase equity.

  What is the most expensive house you can afford

You want to buy a house and can afford a $15,000 down payment and a $1,000 monthly mortgage payment. If 30-year mortgage loans are available for a nominal rate of 3% per year with monthly compounding, what is the most expensive house you can afford?

  Major players in the forwards and futures markets

Who are the three major players in the Forwards and Futures markets and what role do they play?

  Airbus sold an a400 aircraft to delta airlines a us company

airbus sold an a400 aircraft to delta airlines a u.s. company and billed 30 million payable in six months. airbus is

  Saving accounts-investments in stocks and mutual funds

Shelly’s assets include money in checking and saving accounts, investments in stocks and mutual funds,

  What is the project npv

The IRR of this 20-year project is 10.21%. If the firm's WACC is 8%, what is the project's NPV?

  The after-tax cost of debt from the firm

Your firm is considering a new investment proposal and would like to calculate the weighted average cost of capital. to help in this, compute the cost of capital for the firm for the following: A bond that has a $1,000 par value (face value) and a co..

  Does the stock market appear to reward high-dividend payout

Does the stock market appear to reward high-dividend payout? Does it matter what type of investor owns the shares? What is the impact on share price of dividend policy?

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