What is your new estimate of the company stock price

Assignment Help Financial Accounting
Reference no: EM132919945

Question - Full Boat Manufacturing has projected sales of $123.5 million next year. Costs are expected to be $73.6 million and net investment is expected to be $14.75 million. Each of these values is expected to grow at 14 percent the following year, with the growth rate declining by 2 percent per year until the growth rate reaches 6 percent, where it is expected to remain indefinitely. There are 6.4 million shares of stock outstanding and investors require a return of 11 percent return on the company's stock. The corporate tax rate is 22 percent. What is your estimate of the current stock price? Suppose instead that you estimate the terminal value of the company using a PE multiple. The industry PE multiple is 13. What is your new estimate of the company's stock price?

Reference no: EM132919945

Questions Cloud

What is the maximum debt to capital ratio : The firm will use debt and common equity for financing. What is the maximum debt to capital ratio (measured as debt/total common equity) the firm can use
How many hours do think takes to provide : In a companies annual report how many hours do you think it takes to provide our financial statement audit and ICFR opinions? And Why?
Determine the amount of the debt in aud : Prepare the journal entries for the above dates showing the amount of exchange gain or loss. Determine the amount of the debt in AUD
Why a temporary difference relating to employee benefits : Explain why a temporary difference relating to employee benefits obligations for long-service leave creates a deferred tax asset?
What is your new estimate of the company stock price : The corporate tax rate is 22 percent. The industry PE multiple is 13. What is your new estimate of the company's stock price
How might materiality over cash differ from trade payables : What might you use as a basis for determining planning materiality? How might materiality over cash differ from trade payables? Provide an example.
Calculate the federal dividend tax credit : Calculate the Federal Dividend Tax Credit that Mr. Speculator will be entitled to claim on his 2020 personal income tax return
What are the main priorities of a cs style person : In DiSC management, what are the main priorities of a CS style person?
How many students should receive an a : There are 55 students in the class (round answer to the nearest whole number). How many students should receive a C? How many students should receive an A

Reviews

Write a Review

Financial Accounting Questions & Answers

  Prepare a letter and a memo for the firms files

Lynn Jones, Shawn, Walt, and Donna are trying to decide whether they should organize a corporation and transfer their shares of stock in several corporations to this new corporation.- Prepare a letter to your client, Lynn Jones, and a memo for the ..

  Compare the latest net profit after tax npat for two years

discuss the following1. nature of business2. if there are mention and discuss two 2 subsidiaries of the chosen

  How much higher would company first-year net income

How much higher (or lower) would company’s first-year net income have been if absorption costing had been used rather than variable costing? Show computations.

  What should the inventory level be when new order is placed

If the store insists on a 2 day(s) safety stock (assume 365-days a year), what should the inventory level be when a new order is placed

  Determine what is full selling price of a globe with markup

The company would price at a markup of 0.25 above full cost. Assuming sales of 1,200 units, what is the full selling price of a globe with a 0.25 markup?

  Compute what value would place on the stock

Find What value would you place on the stock if an 18 percent rate of return was required by you? which it is expected to grow at a 5 percent rate forever.

  Summarize what debits and credits are

Summarize what debits and credits are. How do they relate to the accounting equation? When are they used? Give an example of a transaction using both debits and credits as well as the accounting equation.

  What the projects internal rate of return is

What the projects internal rate of return is? Lux Company invested in a project that required a $10,000 initial investment. At a required rate of return of 10%.

  Calculate the macaulay duration of an eight percent

Calculate the Macaulay duration of an 8 percent, $1,000 par bond that matures in three years if the bond's YTM is 10 percent and interest is paid semiannually.

  Determine depreciation expense for each of the four years

Compute the depreciation expense for each of the four years, using units-of-production depreciation. (Round cost per unit to three decimal places)

  Discuss whether the directors suggestion is acceptable

NOROCON bhd., Discuss whether the directors' suggestion is acceptable in accordance with the Conceptual Framework for Financial Reporting.

  Find what is the year one cash flow

You were just hired by Bear Down Inc. to analyze the purchase of reusable water bottle manufacturing equipment. What is the Year 1 cash flow?

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