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No-Growth Industries pays out all of its earnings as dividends. It will pay its next $3 per share dividend in a year. The discount rate is 16%. What is the price-earnings ratio of the company? (Do not round intermediate calculations. Round your answer to 2 decimal places.) What would the P/E ratio be if the discount rate were 5%? (Round your answer to 2 decimal places.)
Examine the sensitivity of your answers as you vary the number of simulations from 1000, 10,000, 100,000 and 250,000, Pricing a Second to Default Derivative - Pricing a Second to Default Derivative
The curse of competitive markets A. May be lessened by obtaining patents for new ideas that protect companies from competitors OR B. Implies that profitable industries will become smaller as companies drop out to avoid competition OR C. Means that mo..
The project is to study the changing trends of the Indian Markets due to the foreign investments, in particular FIIs, its impact, being the single largest investor class in the Indian Markets with respect to current issues.
Walter Industries has $4 billion in sales and $1.7 billion in fixed assets. Currently, the company's fixed assets are operating at 95% of capacity. What is Walter's target fixed assets/Sales ratio? What level of sales could Walter Industries have obt..
3 Today, the one-year U.S. interest rate is 2%, while the one-year interest rate in Mexico is 6%. The spot rate of the Mexico peso (MXP) is $.08 the one-year forward rate of the MXP exhibits a 11% discount. Determine the yield (percentage return on i..
ABC Company considers Projects A and B, whose cash flows and the required rate of return (WACC) are shown below. These projects are mutually exclusive and equally risky. The CEO wants to use the IRR criterion, while the CFO recommends the NPV method...
The weighted marginal cost of funds is used in pricing decisions. Explain how it should be used if the loan being priced exhibits average risk. How should the weighted marginal cost of funds be used if the loan carries above average risk?
The coupon rate on an issue of debt is 8%. The yield to maturity on this issue is 10%. The corporate tax rate is 31%. What would be the approximate after-tax cost of debt for a new issue of bonds?
A stock has had returns of −19.6 percent, 29.6 percent, 31.2 percent, −10.7 percent, 35.4 percent, and 27.6 percent over the last six years. What are the arithmetic and geometric returns for the stock?
Consider a project with the following data: accounting break-even quantity = 19,000 units; cash break-even quantity = 16,000 units; life = three years; fixed costs = $160,000; variable costs = $30 per unit; required return = 10 percent. Ignoring the ..
A group of nerds perfect a process for converting seawater into crude oil. In order to keep their process off the market, OPEC offers license to process by paying the nerds an annual royalty payment of $100,000,000 starting one year from now, and the..
Tri-coat Paints has a current market value of $43 per share with earnings of $2.14. What is the present value of its growth opportunities (PVGO) if the required return is 5%?
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