What is the highest price that analyst Leaf thinks

Assignment Help Financial Accounting
Reference no: EM132957182

Question - The company paid a dividend of $1.46 per share quarterly, totalling to $5.84 for the most recent full year, on its common stock. Based on a study of the risk of owning this stock, analysts at Walnut Investment Funds have determined that the required annual rate of return should be ke or r = 8.6%. The second analyst, Mr. Leaf, is convinced that first analyst Branch's evaluation of Tupelo Turbine's future earnings and dividends is too pessimistic. He feels that the company's earnings and dividends will grow in a fairly steady manner that can sensibly be modeled as constant growth of approximately 2.2% per year into the far distant future. Under this set of assumptions, what is the highest price that analyst Leaf thinks the Walnut funds should be willing to pay for a share of Tupelo Turbine Corporation's common stock?

A. $69.40

B. $91.25

C. $54.07

D. $93.26

E. $55.26

Reference no: EM132957182

Questions Cloud

Explain the purpose of a performance appraisal : Explain the purpose of a performance appraisal? What would you measure through performance appraisal also explain how would you measure these appraisal?
Calculate the company s after-tax cost of debt : The debentures have an 8% coupon and pay interest annually with a par value of R1 500. Assuming a tax rate of 30%, calculate company s after-tax cost of debt
What the maximum price that she should be willing to pay : She expects interest rate to stay at 8%p.a. over the time period. What the maximum price that she should be willing to pay for the annuity
Calculate empire cost of preference shares and cost of debt : Calculate the company's cost of equity using the information in the above scenario only. Calculate Empire's cost of Preference shares and cost of Debt.
What is the highest price that analyst Leaf thinks : What is the highest price that analyst Leaf thinks the Walnut funds should be willing to pay for a share of Tupelo Turbine Corporation's common stock
Removal of asbestos case studies : Removal of Asbestos Case Studies - Prepare and submit a report that summarises of each of the sections presented in the case study that you select, ensuring
Compute the after-tax cost of debt for the bonds : After flotation costs, Cenage received $780 per bond. Compute the after-tax cost of debt for these bonds if the firm's marginal tax rate is 40 percent.
Construct the value chain for a traditional furniture : Construct the value chain for a traditional furniture manufacturer (Six basic steps starting with design? Refer this diagram below
Solve the total market value of equity : Solve the total market value of equity. Transpax Ltd hereafter referred to as "Transpax" or "the company", has been operating in the passenger transport

Reviews

Write a Review

Financial Accounting Questions & Answers

  Prepare an absorption costing income statement

Thornton Manufacturing Company makes a product that sells for $75.50 per unit. Prepare an absorption costing income statement

  Calculate his net wages

According to the requisite tables the income tax due on his wages was £46, and National Insurance £28. Calculate his net wages.

  Evaluate the marginal cost per chair to xy

Evaluate the marginal cost per chair to XY of accepting the chair order from ABC? and What assumptions were made in calculating the marginal cost?

  What are total liabilities at the end of the year

Accounts Payable, Census Company had the accounts and balances at the end of the year. What are total liabilities at the end of the year?

  What will uncollectible accounts expense be

If 5% of outstanding receivables will be uncollectable, and the balance in accounts receivable is 200,000, with an allowance account of 3,000 credit balance before adjust ment at the end of the year, what will uncollectible accounts expense be?

  Calculate the company weighted average cost of capital

Calculate the company weighted average cost of capitaL.What is the firm's WACC in this new capital structure? Why do we need to be concerned with the WACC?

  What are major shortcomings in the disclosure notes

What are major shortcomings in the disclosure notes for your selected companies and What are the disclosures points that have been listed in the companies.

  What is the firm return on equity

Selzer Inc. sells all its merchandise on credit. It has a profit margin of 4 percent, days sales outstanding equal to 60 days, What is the firm return on equity

  Find out johns income tax liability

He also paid $14,000 in mortgage interest, $1,800 in property taxes, $300 of credit card interest, and $1400 in job hunting expenses when he tried to change jobs in March. Find out Johns income tax liability for 2009 before any allowable credits.

  Describe why companies develop predetermined overhead rates

Explain why companies develop predetermined overhead rates. Explain why the increase in the overhead rate should not have a negative financial impact on Borealis Manufacturing.

  How much will you have to deposit today

Say you want to have $18,500 in 8 years for a dream vacation. If you can earn an interest rate of 6 percent per month, how much will you have to deposit today

  What is the fixed cost and contribution margin

JFP is losing market share and wants to either advertise or reduce its price. JFP needs to make $25,000 profit to stay in business. It has the following current operations profile: What is the JFP's Fixed Cost? What is JFP's Contribution Margin? What..

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