What is the share price of the stock today

Assignment Help Financial Management
Reference no: EM131898727

A company has earnings per share of $2 and it has 2 million shares outstanding. The company is going to undertake a project which will require investment of 1million now, and another 1.1 million a year from today. THe project will start to provide cash inflows from the end of year 2. THe cash inflow will be $600.000 forever. The required rate of return is 10%. What is the share price of the stock today? (Hint: use an NPVGO approach) Excel is not allowed.

Reference no: EM131898727

Questions Cloud

What is net present value of before-tax unlevered cash flows : What is the net present value of the before-tax unlevered cash flows if you assume a five-year holding period and a discount rate of 12%? ?
What is the wacc for the firm at the optimal level of debt : Calculate the value of the firm. What is the WACC for the firm at the optimal level of debt?
Prepare balance sheet : Prepare a Balance Sheet using the following information:
What effective annual interest rate does the firm : What effective annual interest rate does the firm earn when a customer does not take the discount?
What is the share price of the stock today : A company has earnings per share of $2 and it has 2 million shares outstanding. The required rate of return is 10%. What is the share price of the stock today?
Construct an amortization schedule for the loan : What is the size of her quarterly payment?? construct an amortization schedule for the loan.
Common stock is worth according to corporate valuation model : How much is each share of common stock is worth according to the corporate valuation model?
What is nova sun unlevered cost of equity : What is the firm’s cost of equity? What is Nova Sun’s unlevered cost of equity?
Estimate daily standard deviation and annualized volatility : Estimate the daily standard deviation and annualized volatility of Walmart's holding period returns using (1) 90 days prior to 2016 year-end,

Reviews

Write a Review

Financial Management Questions & Answers

  Compute the current price of the bond

Katie Pairy Fruits Inc. has a $1,000, 20-year bond outstanding with a nominal yield of 15 percent (coupon equals 15% × $1,000 = $150 per year). Assume that the current market-required interest rate on similar bonds is now only 12 percent. Compute the..

  Calculate the building cap rate

Harry decides to purchase an apartment building as an investment. Calculate the building’s cap rate.

  Perpetuity with an annually compounded discount rate

In 30 years, you plan to set up a fellowship fund that pays out 100,000 per year in perpetuity with an annually compounded discount rate of 5%. In order to set up the fund in 30 years, how much do you need to save each year (starting this year) assum..

  The amount of canadian dollars jacque borrowed

You’ll see if you take the interest rate differential and multiply that percentage profit by the amount of Canadian dollars Jacque borrowed.

  What is the price of a share of HNH stock

The HNH Corporation will pay a constant dividend of $2 per share, per year, in perpetuity. What is the price of a share of HNH stock?

  Firm assets are financed entirely with equity

Firm ABC’s assets are financed entirely with equity and Firm XYZ is financed half with debt.

  How much loss would company recognize on income statement

Randy's tireland makes a product that sells for $63 per unit and has $47 per unit in variable costs. Annual fixed costs are $24,000. If Rambles sells 10 units less than breakeven, how much loss would the company recognize on its income statement?

  Standard deviation of the minimum variance portfolio

Calculate the expected return and standard deviation of the minimum variance portfolio.

  What is your cost of funds on new loan if you plan to prepay

You purchased your current home with a loan of $400,000 exactly seven years ago. At that time you secured a 6.04% interest, 30-year mortgage. What is your cost of funds on the new loan if you plan to prepay it at the end of year five?

  What is the bond current price

If the bond is priced to yield 9%, what is the bond's current price?

  Loan amortization-how big will the annual payments

(loan amortization) On December 31 Beth bought a yacht for $50,000. She paid $14,000 down and agreed to pay the balance in 13 equal annual installments that include both the principal and 15 percent interest on the declining balance. How big will the..

  Average collection period

A firm collects 70 percent of its credit sales in 30 days, 20 percent in 60 days, and 10 percent in 90 days. The average collection period is ________.

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