What is the value of the company without the investment

Assignment Help Finance Basics
Reference no: EM132544426

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: EM132544426

Questions Cloud

Explain the consolidation processes of serial : Compare and contrast the two different consolidation processes of serial and single consolidation techniques when indirect ownership interests exist.
Profitability index of the project-we-know-widgets : We-Know-Widgets, Inc. is analyzing a project that requires an initial investment of $10,000, followed by cash inflows of $1,000 in Year 1, $4,000 in Year 2
Calculate the pay for each federal wage-hour law : Calculate the pay for each of the following under federal wage-hour law: Andrea, a waitress, earns $2.13 an hour, plus tips
Calculate pharoah earnings per share : Calculate Pharoah's 2020 earnings per share. Pharoah Corporation had 2020 net income of $1.9 million. During 2020, Pharoah paid a dividend of $6
What is the value of the company without the investment : What is the value of the company without the investment and what is the value with the investment?
Find and solve weighted average number of shares outstanding : Sheridan Limited had 42,000, Calculate the weighted average number of shares outstanding for Sheridan for the year ended December 31, 2020.
What will be the 2nd year interest : Since %15 interest in applied every year, what will be the 2nd year interest?
Journalize the march transaction : March 4 Paid $2 400 cash on a 6 month insurance policy effective March 1. Journalize the March transaction
Calculate diluted earnings per share for year ended december : Calculate diluted earnings per share for the year ended December 31, 2020. The average market price during the last two months of 2020 was $20.

Reviews

Write a Review

Finance Basics Questions & Answers

  Depreciation tax shield for project

Assume a tax rate of 30% and a discount rate of 15%. What is the depreciation tax shield for this project in year 5?

  Break your analysis into evaluations of the firm

Analyze its overall financial situation from both a cross-sectional and a time-series viewpoint. Break your analysis into evaluations of the firm's liquidity, activity, debt, profitability, andmarket.

  Ow do you think stock prices will change on dividend payment

In an efficient market, ignoring taxes and transaction costs, how do you think stock prices will change on dividend payment dates?

  Calculate the firm annual earnings per share

The firm's tax rate is 40 percent on ordinary income. If the annual EBIT is expected to be $100,000, calculate the firm's annual earnings per share (EPS):

  An mne should consider individual country norms

An MNE should consider individual country norms

  Create a portfolio

You would like to create a portfolio that is equally invested in a risk-free asset and two stocks. One stock has a beta of 1.88. What does the beta of the second stock have to be if you want the portfolio to have a beta of 0.87?

  What is the maximum monthly charge cookie cutter

Illustrate what is the maximum monthly charge Cookie Cutter should pay for this lockbox system if the payment is due at the beginning of the month.

  What is the amount of the firm ebit

Advantage First Corporation has sales of $4,667,620; income tax of $416,843; the selling, general and administrative expenses of $282,080

  What is the best estimate of the current stock price

The Ramirez Company's last dividend was $1.75. Its dividend growth rate is expected to be constant at 24% for 2 years, after which dividends are expected.

  Determining the total compensation system

How might a company's business strategy affect the internal alignment policies and techniques of its Total Compensation system?

  What is the given method called

A practitioner has decided to sell his business. He has set the price based on a method that determines the value of a business by taking the adjusted cash flow

  Determine your forecast of profit for a store with sales of

a fast-food restaurant owner operates a dozen outlets in california. one menu item is the most popular among others and

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