What is your best estimate of firm b earnings

Reference no: EM131487892

Question: Dividend Displacement and Value (Medium) Two firms, A and B, which have very similar operations, have the same book value of $100 at the end of 2012 and their cost of capital is 11 percent. Both are forecast to have earnings of $16.60 in 2013. Firm A, which has 60 percent dividend payout, is forecast to have earnings of$17.80 in 2014. Firm B has zero payout.

a. What is your best estimate of firm B earnings for 2014?

b. Would you pay more, less, or the same for firm B relative to firm A in 2012?

Reference no: EM131487892

Questions Cloud

Create your personal comprehensive definition of terrorism : Create your own personal comprehensive definition of terrorism. Identify the key criteria inherent in your personal definition, and explain their importance.

Demonstrate an understanding of the macro economy : Purpose: To develop your familiarity with the language and tools of economic analysis and reasoning by critically analysing a contemporary issue

What is the forecasted per-share value of the equity : Abnormal Earnings Growth Valuation and Target Prices (Medium) The following forecasts of earnings per share ( EPS) and dividend per share (DPS) were made.

Define the term security with respect to a workplace : Define the term "security" with respect to a workplace. What actions can employers take to minimize the risk and impact of workplace violence?

What is your best estimate of firm b earnings : Dividend Displacement and Value (Medium) Two firms, A and B, which have very similar operations, have the same book value of $100 at the end of 2012.

Compare the cum-dividend earnings growth rate forecasted : Calculating Cum-Dividend Earnings Growth Rates Nike (Easy) In early fiscal year 2009, analysts were forecasting $3.90 for Nike earnings per share.

Charge of drafting the employer e-mail policy : Assume that you are in charge of drafting the Employer's e-mail policy that intends to permit Employer monitoring of e-mail.

How is the word myth used popularly : How is the word myth used popularly? For example, what does the statement, "It's a myth" mean?

Calculate cum-dividend earnings per share for general mills : Calculating Cum-Dividend Earnings: General Mills (Easy) General Mills reported earnings and paid dividends from 2006 to 2010 as follows.

User Account

All Pages