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Tarzak Inc. has earnings of $10 per share, and investors expect that the earnings per share will grow by 3 percent per year. Furthermore, the mean PE ratio of all other firms in the same industry as Tarzak is 15. Tarzak is expected to pay a dividend of $3 per share over the next four years, and an investor in Tarzak requires a return of 12 percent. The estimated stock price of Tarzak today should be ____ using the adjusted dividend discount model.
1.how firms estimate their cost of capital the wacc for a firm is 13.00 percent. you know that the firmrsquos cost of
The risk free rate is 7%, the return in the market is 10%, and the beta is 1.30. What return must you receive to be satisfied that you are being fairly compensated for the risk of the firm? What is the excel formula to solve this? What is the yield ..
What types of bubbles were discussed in The Bubble Decade? Given that our markets in the U.S. are supposed to be fairly efficient, how can such bubbles exist and why do new bubbles keep occurring?
You short sold 800 shares of stock at a price of $45 and an initial margin of 55 percent. If the maintenance margin is 30 percent, at what share price will you receive a margin call? What is your account equity at this stock price?
You own a portfolio that is 38 percent invested in Stock X, 22 percent in Stock Y, and 40 percent in Stock Z. The expected returns on these three stocks are 10 percent, 15 percent, and 12 percent, respectively. What is the expected return on the port..
Companies make bonds callable A. In the event interest rates increase. B. In the event interest rates drop. C. To protect the buyers of the bond in the event the company goes bankrupt. D. So the bond can be converted to common stock. E. A or B could ..
Asset A has an expected return of 10% and standard deviation of 20%. Asset B has an expected return of 16% and a standard deviation of 40%. The correlation between A and B is 0.35. Portfolio C is composed of 30% asset A and 70% asset B. Plot the atta..
When used as evidence, what does an effective example do?
Suppose Autodesk stock has a beta of 2.16, whereas Costco stock has a beta of 0.69. If the risk-free interest rate is 4% and the expected return of the market portfolio is 10%, what is the expected return of a portfolio that consists of 60% Autodesk ..
Tom Cruise Lines Inc. issued bonds five years agao at $1,000 per bond. These bonds had a 25-year life when issued and the annual interest payment was then 15%. Assume that five years later the inflation premium is only 3% and is appropriately reflect..
Becky Lewis financed the construction of a garage on her lot with a 9.3% add-on interest home improvement loan from the Guaranteed Savings Bank. The total price of the garage was $11,860 and was financed with equal monthly payments for 6 years. What ..
Calculate the value of leverage for Cruise Company and Kidman Company, whose economic balance sheets are shown. Assume the marginal corporate tax rate is 35%, the marginal tax rate on personal income derived from equity is 20%, and the marginal tax r..
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