What constant rate does owner believe that profits will grow

Assignment Help Financial Management
Reference no: EM131815832

The company where you work is being sold for $200,000. The companyís income statement indicates current profits of $7,000, which have yet to be paid out as dividends. Assuming the company will remain on the market in the infinite future, and the interest rate will remain constant at 5%, at what constant rate does the owner believe that the profits will grow?

Reference no: EM131815832

Questions Cloud

True of risk avoidance : Which of the following is true of risk avoidance?
Determining that how costs and revenues behave : Cost Behavior at Southwest Airlines It is critical that managers understand how costs and revenues behave. One company that is affected by changes in costs.
What is the value of chi-square : Determine the value of c 2 for 12 degrees of freedom and an area of .10 in the left tail of the chi-square distribution curve.
Describe the changes in cost structure : Describe the changes in cost structure that are likely to have occurred at Cravings for Cakes
What constant rate does owner believe that profits will grow : the interest rate will remain constant at 5%, at what constant rate does the owner believe that the profits will grow?
Compute the break-even point in dollar sales for year : The maximum output capacity of the company is 40,000 units per year. Compute the break-even point in dollar sales for year 2011
Right tail of the chi-square distribution curve : Find the value of c2 for 5 degrees of freedom and an area of .025 in the right tail of the chi-square distribution curve. What is the value of chi-square?
What has occurred with your select companys dividend payout : What has occurred with your selected company's dividend payout, dividend yield, and dividend per share over the past three years?
Define the research problem : Why is it important to define the research problem before we collect the data?

Reviews

Write a Review

Financial Management Questions & Answers

  What is the maximum return

A financier plans to invest up to $500,000 in two projects. Project A yields a return of 9% on the investment of x dollars, whereas Project B yields a return of 15% on the investment of y dollars. How much should the financier invest in each project ..

  Difference in the annual inflation rates

What is the difference in the annual inflation rates for the United States and Russia over this period?

  Multinational corporations enter foreign markets

How do multinational corporations (MNCs) enter foreign markets? Please provide one example of each entry mode other than the example provided in the textbook.

  Approaches to projects costs of capital entails

Which one of the following approaches to a project’s costs of capital entails the use of another firm’s cost of capital rather than the use of your own firm’s cost of capital?

  Assuming the company continues its current growth rate

Stock Valuation at Ragan, Inc. Ragan, Inc., was founded nine years ago by brother and sister Carrington and Genevieve Ragan. The company manufactures and installs commercial heating, ventilation, and cooling (HVAC) units. Assuming the company continu..

  Characteristic of a futures contract

which of the following is not a problem that arises when hedging with futures? Which of the following is not a characteristic of a futures contract?

  Determine the economic life of the fuel cell

A special purpose NASA fuel cell requires investment of 80,000 and has no MV at any time.Operating expenses in year k are given by Ck = 15,000 TL + 5,000 TL (k - 2). Obsolescence is reflected in increased operating expenses and is equivalent to 6,000..

  An efficient market is one in which no one ever profits

An efficient market is one in which no one ever profits from having better information than the rest. Discuss this statement and whether or not you find this to be true, false or are you uncertain. Why?

  What is the conversion ratio and the conversion price

Ryan Home Products, Inc., issued $430,000 of 8-percent convertible bonds. Each bond is convertible into 28 shares of common stock any time before maturity. Suppose the current price of the bonds is $1000 and the current price of Ryan common stock is ..

  Depreciate against the dollar from its spot rate

You expect that the INR will depreciate against the dollar from its spot rate of $.0.15 to $.0.125 in 60 days. The following interbank lending and borrowing rates exist: How can you profit from the above given information. Estimate the profits that c..

  Compute the wacc and then compute the debt

First compute the WACC, then compute the debt as 25% of the WACC value, and show how the APV yields the same result.

  How much of the payment goes toward principal and interest

Compute the required monthly payment on a $80,000 30-year, fixed-rate mortgage with a nominal interest rate of 5.80%. How much of the payment goes toward principal and interest during the first year?

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