Reference no: EM133074265
1. Suppose investors expect the yearly dividend paid by Fabian's Flowers Corp to be 5/share permanently (equal to its eps).
Assume the interest rate used by investors to discount these cash flows is 3% and the risk premium investors assign is 8.5%. Applying the Dividend Discount Model, what is price-per-share.
2. If Fabian's Book Value-per-share is 33, what must be the ROE investors are predicting for Fabian's?
3. No Nonsense Peanut Butter maintains a payout ratio of 60%. Its upcoming eps is expected to equal 4. Investors expect 7.5% eps growth into the future.
The interest rate component of the discount rate is the same as Fabian's but investors add another 2% to the risk premium. Using the Gordon Growth Model, what is No-Nonsense's price-per-share?
4. Suppose the market price-per-share of No-Nonsense is 50. What does that imply about the market's expectation for Non-Nonsense's growth rate?
Extra: Given this result, should you buy No-Nonsense? Compare it to Fabian's.
5. Using the assumptions in #1 and #3, calculate the percentage changes in price of an increase of 1.5% in the interest rate on the stock prices of the two companies.
6. Question for thought: The interest rate component of the discount rate equals a "real" interest rate plus an inflation "premium." It would seem, therefore, that an increase of 1.5% in either of these would lead to the results in #5. Why is this an incorrect conclusion?
|
Approximate performance of portfolio
: Assume that the yield of these bonds moves up by 75 bps ( 0.75%) what is the approximate performance of this portfolio using duration convexity formula?
|
|
Calculate the net present value of the project
: Calculate the Net Present Value (NPV) of the project, advise Anele whether to start the project or not basing on this method.
|
|
How much is the cost per unit of the job
: Calco Production uses job-order costing for batches of customer printed t-shirts. If Calco produced and sold 2,500 units in January, how much is the cost
|
|
Analyze the problems these health systems face
: Identify, analyze, and compare two national health systems of your choosing in respect to a political, economic, and social environment
|
|
What is price-per-share
: 1. Suppose investors expect the yearly dividend paid by Fabian's Flowers Corp to be 5/share permanently (equal to its eps).
|
|
What is the intrinsic value of the stock
: Company A has just paid its annual dividend of $3 per share. The dividend is expected to grow at a constant rate of 8% indefinitely
|
|
Why government regulations and private regulations
: Discuss why government regulations and private regulations such as those of The Joint Commission are necessary in health care.
|
|
What is the dollar cost of debt
: The Apex Group, a international Real Estate Investment Trust (REIT) based in New York city, borrows f10,000,000 to finance its expansion in London UK, for one y
|
|
Explain in detail three types of cybercrime methods
: Explain in detail three types of cybercrime methods used by cybercriminals and how effective it can be
|