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XYZ's revenues this past year were $250,000 and total costs were $150,000; and both costs and revenues have been expected to remain the same in perpetuity. XYZ is an all equity firm (i.e., it has no debt), with a return on assets of 10%, and has 100,000 shares outstanding. XYZ currently pays out all its earnings as dividends (100% payout) and has been expected to do so forever. The dividends on the basis of last year's earnings have just been paid out. Unknown to the market, a team of researchers and the President of XYZ suddenly discover that the firm can introduce a range of new products and start expanding the market and increase earnings. However, this expansion will also increase costs and the company will be unable to pay out all the earnings as dividends. The President and her financial team have come up with two growth alternatives.
(I) Grow earnings at an annual rate of 5% forever, but reduce the payout to 70% forever. No other financing will be necessary apart from this plowback.
(II) Grow earnings at an annual rate of 8%, but with a reduction in payout to only 40%. Again no other financing will be necessary apart from this plowback. By how much will the price per share of the firm increase (in dollars) if it adopts the right strategy of growth?
Compute all cash flows, discount rates and determine if the project should be undertaken and show both the equations and the variables, and show the equations with the variables inserted into the equations.
The panel has to decide the winner group and the first and second runners-up. Request your professor to lend supervision to this exercise.
Jones Corporation sales last year were $25 million and its total assets were 8 milliondollar. Accounts payable were $2 million & common stock & retained earnings were 5 million dollar.
for apple inc evaluate its health based on its financial statements which you may download from edgar or the companys
you are the cfo for a 400-bed hospital in your community. you have been asked to present information to the local
What amount of gain has Patriot received from this transaction and is this a capital or ordinary gain and how much tax must Patriot pay on this transaction
case studysaint-foods limited ltd is a brittany-based snack foods producer that is currently undergoing a major
Suppose I am a 100% shareholder of Johnson Corporation. At the starting of 2010, My basis in Johnson Corporation stock was $14,000. During 2010, I loaned $20,000 to Johnson Corporation and Johnson Corp. reported a $25,000 ordinary business loss
Create a financial analysis report of GE, including the following six sections - Research and include in the analysis any current events that might affect the analysis.
Prepare the trading and profit and loss account for the year ended Mar 31, 2008 - sales for the year ended Mar 31, 2008 were 20% higher than the previous years. He always sells goods at cost plus 25%; 20% of total sales for the year ended Mar 31, 2..
The debt or equity ratio from I-Metrix is based on book values. If you were to evaluate the ratio on the basis of market values, could this ratio tend to be higher or lower than on the basis of book values?
Analysis of the business risk of the company and analysis of the systematic risk of the company over the last 5 years.
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