What is the value of the company without the investment

Assignment Help Finance Basics
Reference no: EM132544195

Stand Still Co. has been earning $1 per share on 400,000 shares, and paying out all of the earnings. The discount rate for a company of this risk is 10%. The company has an investment opportunity with a cost of $1,500,000 and expects to earn $230,000 after taxes, but they must reinvest 35% of these earnings to continue to maintain the expansion in earnings. What is the value of the company without the investment and what is the value with the investment?

Reference no: EM132544195

Questions Cloud

Journalize highland? december adjustment to record : Journalize Highland?'s December31, 2018?, adjustment to record bad debts expense using the? percent-of-receivables method. ?(Record debits? first, then credits)
How could improve the cash flow strategies : Can provide some advice to your friend on how he could improve his cash flow strategies, such as managing debt levels and terms of payment?
How much is the unrealized gain recognized on December : The bonds are selling at a yield rate of 10%. How much is the unrealized gain (loss) recognized on December 31, 20x1
Our natural resources : Our natural resources are valuable and important to sustain so that we have continued access to these resources in the future.
What is the value of the company without the investment : Stand Still Co. has been earning $1 per share on 400,000 shares, and paying out all of the earnings. The discount rate for a company of this risk is 10%.
Leg business law : We'll be examining how our legal system protects persons who are injured by the purposeful act of another.
What is Public Sector Auditing Standard explain in detailed : What is a Public Sector Auditing Standard explain in detailed? Provide 5 to 6 recommendation on how audit can improve the government's decision making
Find the value of the mortgage on the house : Find the value of the monthly payment? Find the value of the mortgage on their house? Find the loan outstanding after making 20 payments?
What will be the 2nd year interest : Since %15 interest in applied every year, what will be the 2nd year interest?

Reviews

Write a Review

Finance Basics Questions & Answers

  What are the various ways to determine what variables

how does a multiple regression compare with a simple linear regression?what are the various ways to determine what

  Why are convertible preferred securities so prevalent

Venture capital funds want to invest in innovative startups. Why should VC manager care about agency theory? What is agency theory about?

  What is a cat bond and how can it be used to manage risk

What methods can a company use to transfer risk? How does a core risk differ from a non core risk? How can derivatives be used in risk management? What is a cat bond and how can it be used to manage risk?

  Determine the current value of a share

The Foreman corporation earnings and common stock dividends have been growing at an annual rate of 6% over the past ten years and are expected to continue increasing at this rate for the foreseeable future.

  Evaluate how many shares will be repurchased

Evaluate how many shares will be repurchased and what is the value of equity after the repurchase has been completed? What is the price per share?

  Calculate the terminal cash flow at the end of year

They estimate that the old machine could be sold at the end of 4 years to net $15,000 before taxes; the new machine at the end of 4 years will be worth $75,000 before taxes. Calculate the terminal cash flow at the end of year 4 that is relevant to th..

  Describes the culture of zappos

Of the four types of corporate culture, which most closely describes the culture of Zappos? What are the implications for the organization and for managers and employees? Is this a company you could work for? In terms of corporate culture, why or ..

  Unsystematic and systematic risk

The risk premium, for a stock, required by investors, therefore depends on the total risk." To what extent do you agree with this statement.

  Calculate the expected return on the stock

Assume Risk-free rate = 3%, Expected return on the market = 8%. Calculate the expected return on the stock if the beta is1. 02. 0.5

  What is his profit and what is the new fund value

Unhappy with the results, the new investor then sells the 389.09 shares. What is his profit? What is the new fund value?

  What are the characteristics of successfully funded

What are the characteristics of successfully funded companies? By Venture Capitalist.

  Preparers of prospectuses

Also provide details of what defences preparers of prospectuses may be able to utilise in relation to defective content.

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