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1. Will-O-Wind Airlines always invests (in non-depreciating assets) 20% of its earnings, which will be next period (Period 1) $3 per share. The rest it pays out as dividends. Its investment opportunities currently earn (and are expected to earn in the indefinite future) 18%. There are no taxes. The risk adjusted required rate of return on this stock is 10%. What is its price?
2. The current earnings of Video Inc. are $2.00 a share, and it has just paid an annual dividend of 40 cents. You forecast that for the next four years both earnings and dividends of the company will continue grow at the rate of 25% a year over the period. From year 5 on, you expect the subsequent growth rate to drop to the industry average of 8%. If the capitalization rate for the stock is 15%, calculate its price and the present value of growth opportunities [PVGO].
3. You are an analyst evaluating Up-and-Coming Airlines Inc., a very hot potential acquisition candidate your company is considering. Up-and-Coming currently has no debt and you estimate that it should be able to generate $1 million a year from its existing assets (after tax cash flow). Furthermore, it has the opportunity to invest one-half of its earnings indefinitely. You estimate that because of better management, your company should be able to improve the rate of return that Up-and Coming can earn on its new investment opportunities. The appropriate discount rate for Up-and-Coming's cash flows is 10%. Up-and-Coming can be purchased for $60 million and management asks you what you think. What rate of return would Up-and-Coming have to earn on its new investments to justify such a price?
a. Describe the characteristics of a low-cost auto insurance plan.b. What is a "no pay, no play" law?
An investment offers to triple your money in 24 months. What rate per six months are you being offered?
if you are planning an acquisition that is motivated by trying to acquire expertise you are basically seeking to gain
The global financial crisis that began in mid-2007 illustrated how quickly and severely liquidity risks can crystallize and certain sources of funding can evaporate, compounding concerns about the valuation of assets and capital adequacy. A number..
classification when assessing the investment merits of a given company? Please list and discuss up to three ratios you believe meet this criteria, and explain [with real life examples] your reasoning.
What is the convertible's straight bond's value? What is the implied value of the convertible feature?
Curltown Cinemas operates a chain of 30 cinemas. Standard admission price is $7 per person. What is Curltown Cinemas' total revenue from cinema admissions for a year?
Would it be possible to properly implement HPWS in an online institution of higher education? If your answer is yes, how would you implement HPWS as an HR team leader?
Find an article in the current financial press discussing working capital. Also, discuss how your company determines working capital.
There are some companies out there that feel like the end is near so pay out a bunch of returns to investors in panic which is essence is financial slack. Do you think that the SEC can force them to pay that back?
A capital investment project that generates new opportunities is more valuable than one that doesn't. A flexible project, one that does not commit management to a fixed operating strategy is more valuable than an inflexible one. When a project is ..
What is the monthly loan payment? Round your answer to the nearest cent. $ What is the loan's EFF%? Round your answer to two decimal places.
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