What is the present value of its growth opportunities

Assignment Help Financial Management
Reference no: EM131528567

Sisters Corp expects to earn $8 per share next year. The firm’s ROE is 15% and its plowback ratio is 50%. If the firm’s market capitalization rate is 10%.

a. Calculate the price with the constant dividend growth model. (Do not round intermediate calculations.)

Price            $

b. Calculate the price with no growth.

Price            $

c. What is the present value of its growth opportunities? (Do not round intermediate calculations.)

PVGO            $

Reference no: EM131528567

Questions Cloud

What is combined value of equity in two existing companies : What is the combined value of equity in the two existing companies? What is the value of the new firm’s equity?
What price will the stock sell : If the coming year's earnings are expected to be $2 per share, at what price will the stock sell?
Narrative analysis of this investment alternative : What is the present value? Narrative analysis of this investment alternative?
What starting salary do you need to reach this goal : What starting salary do you need to reach this goal?
What is the present value of its growth opportunities : Calculate the price with the constant dividend growth model. What is the present value of its growth opportunities?
What is the value of savings bond at the end of year five : Future value-Grand Opening Bank is offering a one-time investment opportunity for its new customers. What is the value of the savings bond at end of year five
Determine the loss-gain or recapture of macrs depreciation : Determine the loss, gain, or recapture of MACRS depreciation on the sale. The ADR is 12 years for this machine.
What is the price of the bond today : The bond pays an 5 percent semiannual coupon, and the bond has a 7 percent nominal yield to maturity. What is the price of the bond today?
Determine the units-of-production depreciation schedule : Determine the units-of-production depreciation schedule for the equipment.

Reviews

Write a Review

Financial Management Questions & Answers

  Given the vast resources available to mutual fund managers

Given the vast resources available to mutual fund managers, these managers on average have generally:

  What is the bonds yield to maturity

Suppose a ten-year, 1,000 bond with an 8.8% coupon rate and semi annual coupons is trading for 1,034.65. What is the bond's yield to maturity (expressed as an APR with semi annual compounding)? If the bond's yield to maturity changes to 9.5% APR, wha..

  Earnings to fuel growth-current share price

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a $14 per share dividend 10 years from today ..

  Three deposits have added to your nest-egg

Assume that, to help build your nest-egg, you made two deposits of $100, one on January 1, 2013, and one on July 1, 2013, in a savings account that paid 10 percent compounded semiannually. Then you made a third S100 deposit on April 1, 2014. How much..

  The profit margin rate would be

Financial information is presented below: THE PROFIT MARGIN RATE WOULD BE?

  Analyze gasoline price hike statistics

Analyze gasoline price hike statistics in the following scenario. In June 2008, the U.S. retail gas price jumped from $3 to $4 a gallon. This is a 33% increase in price from January 2008. During that time, the total quantity of gasoline purchased fel..

  Appropriate election to treat cutting as sale or exchange

A corporation owns many acres of timber, The corporation made the appropriate election to treat the cutting as a sale or exchange.

  Equipment to produce specialized aluminum products

ALUM, Inc. uses high-tech equipment to produce specialized aluminum products for its customers. Each one of these machines costs $1,520,000 to purchase plus an additional $48,000 a year to operate. The machines have a five-year life after which they ..

  Limitation of the percent of sales method

Which of the following is a limitation of the “percent of sales method” of preparing pro forma financial statements?

  The credit spread for this firms ten-year debt

A firm issues ten-year bonds with a coupon rate of 6.5%, paid semiannually. The credit spread for this firm's ten-year debt is 0.8%. New ten-year Treasury notes are being issued at par with a coupon rate of 5%. What should the price of the firm's out..

  Money european call option on stock index

Calculate the value of a three-month at-the-money European call option on a stock index when the index is at 250, the risk-free interest rate is 10% per annul,

  What does the irr rule recommend

Your project costs $1,000 and will pay $600 in the first year and $500 in the second year. What does the IRR rule recommend? What does the NPV rule recommend?

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