What is the price of the stock now

Reference no: EM13282804

The stock of Cacique Corp., is expected to have earnings per share (EPS) next year of $6 per share. The required return for its stock is 15%.

(a) What is the price of the stock if Cacique retains 50% of its earnings to finance future growth and these funds are invested in projects with a return on equity(ROE) of 15 percent? Assume that right now Cacique has more projects and it has to retain 70% instead of 50%. What is the price of the stock now?

(b) Assume right now that Cacique C.A. can earn a ROE of 18% on its investments. What is the price if the retention ratio is 50%? What is the price if Cacique retains 70%?

Reference no: EM13282804

Questions Cloud

Determine the initial mass of ice : A cooking vessel on a slow burner contains 11.2 kg of water and an unknown mass of ice in equilibrium at 0°C at time t = 0. determine the initial mass of ice

Compute the frequency with which the wheel spins : A circular wheel has a radius R = 0.45 + or - 0.02 m. The wheel is observed to be rotating uniformly with period T = 2.00 +or- 0.05 s. Compute the frequency with which the wheel spins

Explain the vapor pressure of pure benzene : A solution consists of 3.88 g benzene,C6H6 , and 2.45 g toluene ,C6H5CH3. The vapor pressure of pure benzene at 20. °C is 75 mm Hg and that of toluene at 20.0 °C is 22 mm Hg.

What is the cost of capital for theis project : The debt-equity ratio is .65 and the tax rate is 36 percent. What is the cost of capital for theis project?

What is the price of the stock now : The stock of Cacique Corp., is expected to have earnings per share (EPS) next year of $6 per share. The required return for its stock is 15%.

What is the temperature of the air inside the tires : When my car has been parked for a while, its tires look a wee bit ‘low,' and, when their pressure is measured at 23 C, What is the temperature of the air inside the tires

How many grams of phenol do need to add to make ssolution : Phenol is a weak organic acid with Ka=1.0x10^-10. How many grams of phenol do you need to add to 500. mL of water to make a pH=5.75 solution

What is the eps for each company : Company A has 40 shares outstanding and pays no interest. Company B has 30 shares outstanding and pays $25 in interest. What is the EPS for each company?

How to determine fe3+ in an unknown solution : To determine [Fe3+] in an unknown solution, 1.00 mL of the solution was diluted to 50.0 mL. After addition of excess SCN-, the absorption of the standard solution =0.193 at 580 nm. What is the [Fe3+]

User Account

All Pages