What is gcs intrinsic value per share

Assignment Help Financial Management

Reference no: EM131890528

The GC corporation pays no dividend currently and is not expected to for the next 4 years. Its latest EPS was $5, all of which was invested in the company. The firm's expected ROE for the next 4 years is 20% per year, during which time it is expected to continue to reinvest all of its earnings. Starting 5 years from now, the firms' ROE on new investments is expected to fall to 15% per year. GC's required rate of return is 15% per year.

a) What is GC's intrinsic value per share?

b) If its current market price is equal to its intrinsic value, what do you expect to happen to its price over the next year?

Reference no: EM131890528

Questions Cloud

What will be the new portfolio beta : You have a portfolio with a beta of 2.36. What will be the new portfolio beta if you keep 10 percent of your money in the old portfolio

Draft terms of reference and highlighting your knowledge : Draft Terms of Reference, highlighting your knowledge, skills and role, to work as a development professional at community level. (Three to four pages)

What variables are important in measuring body composition : What is the margin of error? Experiment with 2 subjects using these 2 different formulas. Using each formula on each subject compare the results.

What is ll after-tax cost of debt : LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 40%, what is LL's after-tax cost of debt

What is gcs intrinsic value per share : the firms' ROE on new investments is expected to fall to 15% per year. GC's required rate of return is 15% per year. What is GC's intrinsic value per share.

Discuss your communication plan for the union representative : Discuss your communication plan for the union representative, teachers, other campus personnel, and the community of parents.

Tax shield from the amortization of flotation costs : If the flotation cost is 2% of the issue proceeds, then what is the after-tax cost of debt? Disregard the tax shield from the amortization of flotation costs.

Describe the multicultural competencies or techniques used : Part of being a multiculturally competent counselor is to be able to critically apply research to your counseling.

Growth opportunities resulting from the new project : What is the value of the growth opportunities resulting from the new project?

User Account

All Pages