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Question - A heavy equipment distributor company achieved sales of $200 million this year. Along with the increase in demand for heavy equipment for mining, sales are expected to increase by 20% next year and 15% in the following year. The company, which has 5 million outstanding shares, targets a net profit margin of 10% and distributes dividends with a 40% payout ratio.
1. Currently, the risk-free rate is 11% and the expected market return is 16%. Meanwhile, from observations of stock prices and the historical Stock Market Index, every 1% change in the Stock Market Index will be responded to by a 1.2% change in stock prices in the same direction. What is the cost of equity of this stock?
2. If at the end of the second year, heavy equipment stocks are expected to have a P/E ratio of 8.0x, what is the current fair price of the shares?
Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest. How much control does the Fed have over this longer real rate?
Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.
Accounting problems, Draw a detailed timeline incorporating the dividends, calculate the exact Payback Period b) the discounted Payback Period. the IRR, the NPV, the Profitability Index.
Term Structure of Interest Rates
Write a report on Internal Controls
Prepare the bank reconciliation for company.
Create a cost-benefit analysis to evaluate the project
Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR
Distinguish between liquidity and profitability.
Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.
Simple Interest, Compound interest, discount rate, force of interest, AV, PV
CAPM and Venture Capital
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