4. Hughes Cable Systems plans to offer its employees a salary enhancement package that has revenue sharing as its main component. Specifically, the company will set aside I % of total sales for yearend bonuses for all its employees. The sales are expected to be $5 million the first year, $6 million the second year, and amounts increasing by 20% each year for the next 5 years. At an interest rate of 10% per year, what is the equivalent annual worth in years I through 5 of the bonus nackage?

4. Hughes Cable Systems plans to offer its employees a salary enhancement package that has revenue sharing as its main component. Specifically, the company will set aside I % of total sales for yearend bonuses for all its employees. The sales are expected to be $5 million the first year, $6 million the second year, and amounts increasing by 20% each year for the next 5 years. At an interest rate of 10% per year, what is the equivalent annual worth in years I through 5 of the bonus nackage?

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Similar questions

Halliford Corporation expects to have earnings this coming year of $2.89 per share. Halliford plans to retain all of its earnings for the next two years. For the subsequent two years, the firm will retain 45% of its earnings. It will then retain 21% of its earnings from that point onward. Each year, retained earnings will be invested in new projects with an expected return of 21.52% per year. Any earnings that are not retained will be paid out as dividends. Assume Halliford's share count remains constant and all earnings growth comes from the investment of retained earnings. If Halliford's equity cost of capital is 9.4%, what price would you estimate for Halliford stock? Note: Remember that growth rate is computed as: retention rate x rate of return. The price per share is $ (Round to the nearest cent.)
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Halliford Corporation expects to have earnings this coming year of $3.26 per share. Halliford plans to retain all of its earnings for the next two years. Then, for the subsequent two years, the firm will retain 50% its earnings. It will retain 17% of its earnings from that point onward. Each year, retained earnings will be invested in new projects with an expected return of 22.8% per year. Any earnings that are not retained w be paid out as dividends. Assume Halliford's share count remains constant and all earnings growth comes from the investment of retained earnings. If Halliford's equity cost of capital is 10.6%, what price would you estimate for Halliford stock? The stock price will be $ (Round to the nearest cent.)
Halliford Corporation expects to have earnings this coming year of $2.82 per share. Halliford plans to retain all of its earnings for the next two years. For the subsequent two years, the firm will retain 54% of its earnings. It will then retain 20% of its earnings from that point onward. Each year, retained earnings will be invested in new projects with an expected return of 26.02% per year. Any earnings that are not retained will be paid out as dividends. Assume Halliford's share count remains constant and all earnings growth comes from the investment of retained earnings. If Halliford's equity cost of capital is 9.9%, what price would you estimate for Halliford stock? Note: Remenber that growth rate is computed as: retention rate rate of return. The price per share is $ (Round to the nearest cent.)
Halliford Corporation expects to have earnings this coming year of $3.36 per share. Halliford plans to retain all of its earnings for the next two years. For the subsequent two years, the firm will retain 51% of its earnings. It will then retain 21% of its earnings from that point onward. Each year, retained earnings will be invested in new projects with an expected return of 22.26% per year. Any earnings that are not retained will be paid out as dividends. Assume Halliford's share count remains constant and all earnings growth comes from the investment of retained earnings. If Halliford's equity cost of capital is 11.9%, what price would you estimate for Halliford stock? Note: Remember that growth rate is computed as: retention rate x rate of return. The price per share is $. (Round to the nearest cent.)
The Portland Stallions professional football team is looking at its future revenue stream from ticket sales. Currently, a season package costs $425 per seat. The season ticket holders have been promised this same rate for the next five years. Six years from now the organization will raise season ticket prices based on the estimated inflation rate of 3.5%. What will the season tickets sell for in six years?
A company has had record profits and decided to use some of the profits to pay for manufacturing improvements. If the company can invest $1,600,000.00 in an a annuity will that will make payments at the beginning of every six months for 4 years. If the annuity pays 5.6%, compounded semi-annual. What is the size of payments that the company can expect?The payment amount will be $. (Round to 2 decimal places.)
If annual sales of a product are forecast to be $100 million per year for 10 years, a team should consider a 5 percent royalty as equivalent to a $50 million up- front payment when negotiating a licensing or partnership agreement. True False
Emerald Enterprises is developing a new product at the cost of $ 50,000. The new product is expected to increase the cash flow for the next five years as follows: $ 10000, $ 15000, $ 15000, $ 20000 and $ 20000. If the discounting rate is 12%, what is the discounted payback period? (Note: Roundup the fractional values; that is if the payback period is 6.23 years, enter 7 years as payback period) 4 years 5 years 3 years 2 years
Halliford Corporation expects to have earnings this coming year of $3.33 per share. Halliford plans to retain all of its earnings for the next two years. For the subsequent two years, the firm will retain 55% of its earnings. It will then retain 17% of its earnings from that point onward. Each year, retained earnings will be invested in new projects with an expected return of 21.56% per year. Any earnings that are not retained will be paid out as dividends. Assume Halliford's share count remains constant and all earnings growth comes from the investment of retained earnings. If Halliford's equity cost of capital is 10.8%, what price would you estimate for Halliford stock? Note: Remenber that growth rate is computed as: retention rate × rate of return. The price per share is $ (Round to the nearest cent.)
1. Prepare a contribution format income statement that shows the expected net operating income each year from the franchise outlet. 2-a. Compute the simple rate of return promised by the outlet. 2-b. If Mr. Swanson requires a simple rate of return of at least 18%, should he acquire the franchise? 3-a. Compute the payback period on the outlet. 3-b. If Mr. Swanson wants a payback of two years or less, will he acquire the franchise?
A downtown bank promises its potential employees a $9000 sign-on bonus, an additional bonus of $ 13000 two years from now, an additional bonus of $ 16000 four years from now, and an additional bonus of $ 21000 six years from now. Lavanya was hired today but only intends to work for this bank for three years. What is the present value of this bonus payment structure to her? (Assume that money is worth 8% p.a. compounded quarterly) O a. $18235.66 O b. $ 20235.80 O c. $19411.07 O d. $ 20095.37 O e. $ 20449.97

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