Suppose a company in the E-commerce industry is expected to pay a dividend of $0.28 per share wit plowback ratio of 40% which is common for the industry. It is also known that, on average, 75% of the price for companies in this industry is paid by the investors for the present value of growth opportunit (PVGO). The estimated fair value per share for the company stock if the required return is 12% per ann closest to O a. $15.6 O b. $14.7 O c. $20.5
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- Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1 and by 5% in Year 2. Its operating profitability ratio (OP) is 10%, and its capital requirement ratio (CR) is 80%? What are the projected sales in Years 1 and 2? What are the projected amounts of net operating profit after taxes (NOPAT) for Years 1 and 2? What are the projected amounts of total net operating capital (OpCap) for Years 1 and 2? What is the projected FCF for Year 2?Suppose instead that the company is about to pay a dividend of $2.00 per share. You also learn that the company is expected to have net income of $100 million, dividends of $50 million, and total equity of $1.5 billion (and that these relationships are expected to be stable). If the relevant required rate of return is 10%, what is the intrinsic value per share of the company’s stock?The following financial information belong to the Avatar Inc. that is currently listed on the stock exchange under the technology sector: Total assets Total equity Net profit after taxes Earnings per share (EPS) Dividend payout ratio RM150,000,000 RM70,000,000 RM20,000,000 RM6.00 per share 45 percent By using the constant-growth Dividend Valuation Model (DVM) and a required rate of return of 20 percent, find the maximum price you should be willing to pay for this stock. Explain 'cyclical stocks' in relation to beta.
- Management of ABC Co. is attempting to estimate the company’s cost of equity capital. IF the company has a constant growth rate of 5%, a forecasted dividend of P2.11, a share price of P23.12 and is subject to 30% income tax, what is the estimated cost of ordinary equity?It is expected that ABC Ltd earnings will remain unchanged in the future. The company’s share price is currently worth $20.0. If the required rate of return is 15%, what is the dividend paid (with formula and calculation)A firm in the IT sector is considering how to set its dividend policy. It has a capital budget of €3,000. The company wants to maintain a target capital structure that is 15% debt and 85% equity. The company forecasts that its net income this year will be €3,500. If the company follows a residual dividend policy, what will be its total dividend payment and its payout ratio? Dividends = Net income – [(target equity ratio) *(total capital budget)].
- Growth Tech Inc., has earned $ 40 as Earnings Per Share. It proposes to pay $10 as dividend and reinvest the remaining. The return on investment by the firm is 20%. What is the growth rate of the firm’s earnings and dividends assuming a constant payout ratio and return on investment? A. 20% B. 18% C. 15% D. 12%As the assistant to the CFO of Johnstone Inc., you must estimate its cost of common equity. You have been provided with the following data: D0 = $0.80; P0 = $22.50; and gL = 8.00% (constant). Based on the dividend growth model, what is the cost of common from reinvested earnings? 10.69% 11.25% 11.84% 12.43% 13.05%A company expects a 20% return on equity invested entirely in new projects. The company's management plans to retain 30% of its net profits. Earnings per share for the coming year are €3 and the expected return for investors is 12% for investments with a similar risk to that of the company in question. What will the share price be and the P/E ratio if the company paid the whole of its net profits in dividends?
- 6) If Microsoft's common stock is currently trading at $52.50 per share, and the company is expected to pay a dividend of $2.50 at the end of the year (D1 = $2.50) with a growth rate of 5.50% per year, what is the company's weighted average cost of capital (WACC) if it only uses retained earnings for its equity financing? Assuming the target capital structure of the company is 45% debt and 55% common equity, and the before-tax cost of debt is 7.50% with a tax rate of 40%, we can calculate the WACC using the cost of debt and cost of equity.Suppose that a company's most recent dividends per share paid upon the last year's net income was $1.6 . The share price of the company is fairly valued in the market at $10 . The expected dividend growth rate is 2% in perpetuity. Given that the risk-free rate is 3% and market risk premium is 10%, what happens to the share prices when the whole market increases by 10%? a) increase by 15.32%b) increase by 15.00%c) increase by 11.79%d) increase by 21.89%e) otherStart - Up Industries is a new firm that has raised $210 million by selling shares of stock. Management plans to earn a 20% rate of return on equity, which is more than the 15% rate of return available on comparable - risk investments. Half of all earnings will be reinvested in the firm. What will be Start - Up's ratio of market value to book value? Note: Do not round intermediate calculations. What will be Start - Up's ratio of market value to book value if the firm can earn only a rate of return of 10% on its investments? Note: Do not round intermediate calculations. Round your answer to 1 decimal place.