A firm has recently reported earnings per share of $ 14.00 and paid dividends per share of $6.77. The earnings have grown 5% a year. The shares have a beta of 1.20. The Treasury bond rate is 2% and the return on the market is 9.5%. Estimate the P/E ratio of the firm.
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- An analyst has collected the following information regarding Christopher Co.: · The company's capital structure is 70 percent equity, 30 percent debt. · The yield to maturity on the company's bonds is 5 percent. · The company's year-end dividend (D1) is forecasted to be $0.8 a share. · The company expects that its dividend will grow at a constant rate of 5 percent a year. · The company's stock price is $25. · The company's tax rate is 40 percent. · The company anticipates that it will need to raise new common stock this year. Its investment bankers anticipate that the total flotation cost will equal 10 percent of the amount issued. Assume the company accounts for flotation costs by adjusting the cost of capital. Given this information, calculate the company's cost of new equity. Round it to two decimal places.Reiterpallasch Inc. has provided you the following data: the company expects to pay a dividend of $0.65 at the end of the year, and the dividend is expected to grow at a constant rate of 6.00% per year, the current price of a share of stock is $16.00 per share, and the flotation cost for issuing new shares is 10.00%. The yield on the company's outstanding bonds is 7.75%, and the tax rate is 25%. The target capital structure consists of 40% debt, with the remainder consisting of common equity. Assuming the company MUST issue new stock to finance its capital budget, what is the company's WACC?Below you can find the relevant financial information for Bristol Investments PLC during the latest financial year: Name: Bristol Investments PLC Capital Structure: all equity finance Earnings per Share (EPS): £4.5 Standard deviation of Returns: 25% Covariance with Market Portfolio: 0.026 The firm has just paid out its last dividend. The market portfolio has an expected return of 13% and an annual standard deviation of 23%. The annual risk-free rate is 5.5%. Assume that the expected returns are explained by the Capital Asset Pricing Model (CAPM). The firm’s expected growth in earnings per share is constantly at 2.2% and pays out all its earnings as dividends on an annual basis. Question: What is the required rate of return for Bristol Investments PLC?
- Diana Corporation anticipates a 10 percent growth in net income and dividends. Next year, the company expects earnings per share of P5 and dividends per share of P3. Diana will be having its first public issuance of common stock. The stock will be issued at P40 per share. REQUIREMENTS: 1. What is the P/E ratio? 2. What is the required rate of return on the stock?A firm has experienced a constant annual rate of dividend growth of 3 percent on its common stock and expects the dividend per share in the coming year to be P2.70. The firm can earn 12% on similar risk involvements. 1. The value of the firm's common stock per share is?IRQ has common stock outstanding, which is trading at $25 per share. IRQ paid a dividend yesterday of $2.22 per share. The dividends are expected to grow at 3%. Their beta is 1.32 The current risk-rate is 3.24% The market risk premium is 6.75% What is the estimate of the cost of common equity (retained earnings)?
- A firm’s stock is selling for $19.50. Just recently they paid a $3 dividend and dividends are expected to grow at 5% per year. What is the required return? a. 10.50% b. 16.15% c. 1.044% d. 15.79%ZAT had a FCFE of 4.5M last year and has 2.25M shares outstanding . ZAT required return on equity is 10% . If FCFE is expected to grow at 6% for ever . The intrinaic value of Zat equity per share isA stock has earned $3.54 per share before dividends. They have a DPR of 35%. Similar stocks have P/E ratios of 15.3. What is your expected price target if the company earns $3.97 per share next year?
- The market capitalization rate on the stock of Aberdeen Wholesale Company is 10%. Its expected ROE is 12%, and its expected EPS is $5. If the firm's payout ratio is 70%, what is the value of the stock assuming a constant growth of dividends? Round your answer to two decimal places.A firm will start paying dividend of $3 per year from year-3. The return on equity is 15% and the pay-out ratio is 60%. If the investors required rate of return is 20% compute the current price of Stock. a. $ 20.00 b. $ 21.43 C. $ 14.88 d. $ 15.00XYZ Corporation's beta is calculated 1.20. The corporation paid $1.25 dividend last year. The growth rate in XYZ's earnings and dividends is estimated 25.00% for the next 5 years, after which the growth rate will be 2.00%. The risk-free rate of return is 3.00%, and XYZ's management estimates that the market return is 8.50%. Calculate the current common stock price of the corporation.