Derry Corporation is expected to have an EBIT of $2,600,000 next year. Increases in depreciation, the increase in net working capital, and capital spending are expected to be $160,000, $115,000, and $155,000, respectively. All are expected to grow at 16 percent per year for four years. The company currently has $13,500,000 in debt and 1,150,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3 percent indefinitely. The company's WACC is 9.2 percent and the tax rate is 23 percent. What is the price per share of the company's stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Share price $ 41.86 X
Q: 1. What would be the expected net present value (NPV) of this project if the project’s cost of…
A: Multiple questions were asked & as per honoring guidelines answered the first question. Net…
Q: In general, the more specialized a space is ... Note: There may be more than 1 correct answer. The…
A: In this question, we have to select all the statements that apply to a more specialised space.
Q: You are a young personal financial adviser. Molly, one of your clients approached you for…
A: The Effective Rate is the interest rate that takes into account the compounding of interest over a…
Q: Colin is 40 years old and wants to retire in 27 years. His family has a history of living well into…
A:
Q: t to buy a Honda Civic. The MSRP is $26,185. Honda offers a purchase financing plan with no money…
A: Loan amount is the present value of the payment done for the loan based on time value of money and…
Q: Suppose the market portfolio has an expected return of 9% and a volatility of 18.5%. YMH stock…
A: Sharpe ratio shows the risk adjusted performance of the stock based on risk free rate and volatility…
Q: Problem A-21 (Algo) Sensitivity Analysis in Capital Investment Decisions Green & Company is…
A: NPV is also known as Net Present Value. It is a capital budgeting technique which helps in decision…
Q: Company A has 279,000 basic shares outstanding and 26,000 outstanding options and warrants. The…
A: Fully diluted shares include covertly preferred stocks, or stocks that can be claimed through…
Q: Your parents will retire in 27 years. They currently have $370,000 saved, and they think they will…
A: Retirement income refers to the funds and financial resources that an individual or household…
Q: Suppose that the value of a bank's assets is $37 billion and the value of its liabilities is $30…
A: Return on equity(ROE) measures the profitability of shareholders' equity. It is calculated by…
Q: Frostbite thermalwear has a zero coupon bond issue outstanding with a face value of 18,000 that…
A: A popular mathematical method in finance for pricing European-style options is the Black-Scholes…
Q: a. What is the net present value of the investment in the furnace? Note: Do not round intermediate…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: to purchase a vacation home. The bank requires a 5% down payment on the $450,000 vacation home. The…
A: Loans are paid by equal monthly installments that carry the payment for interest and loan also.We…
Q: Suppose that the marginal tax rate is 15%. If a farmer decide to purchase a combine it will increase…
A: Net present value refers to the method of capital budgeting used for evaluating the worth of the…
Q: Year 0 Cash Flow - 100 -73 Year 1 Cash Flow Year 2 Cash Flow 40 30 ack period for project A is…
A: Payback period of any project is time required to recover initial investment of projects done.
Q: You are evaluating two different cookie-baking ovens. The Pillsbury 707 costs $69,500, has a 5-year…
A: NPV is also known as Net Present Value. It is a capital budgeting technique which helps in decision…
Q: Athena Investment Company is considering the purchase of an office property. After a careful review…
A: Cap rate is known as the capitalization rate which is used for evaluating the real estate investment…
Q: How does the WACC DCF methodology mechanically incorporate interest tax shields (select the best…
A: The correct answer is "By estimating a discount rate that incorporates the tax benefits of debt."In…
Q: DuraTech Manufacturing is evaluating a process improvement project. The estimated receipts and…
A: It represents the flow of cash in and out of the firm. Cash received by the organisation helps in…
Q: ABC Company and XYZ Company are identical firms in all respects except for their capital structure.…
A: Equity $ 5,75,000.00 $ 2,87,500.00Debt $ - $ 2,87,500.00EBIT $ 64,000.00 $…
Q: The following financial information is available for Hero Sports Ltd.: Sales Costs Addition to…
A: Net Income = Dividends + Additions to retained earningsEarnings before tax = Net Income/(1-Tax rate)…
Q: project requires an initial investment of $500,000. This project will generate a future cash flow of…
A: NPV means Net Present value.It is a capital budgeting technique used for making investment…
Q: Octavia Bakery is planning to purchase one of two ovens. The expected cash flows for each oven are…
A: Payback period (PBP) refers to the period or duration within which the company is able to recover…
Q: Apple is planning on launching a new iPhone in 2019. To support the launch, Apple plans to increase…
A: Working Capital = Current assets - Current liabilities.Current assets include Cash , Accounts…
Q: Problem 8-8 Payback (LO4) The following are the cash flows of two projects: Year 0 1 2 3 Project A $…
A: The payback period helps measure the time required to recoup the cost of a project or investment. If…
Q: A perpetuity pays $85 per year and costs $3,580. What is the rate of return? Select the correct…
A: Given:Annual Payment = $85Cost of the Perpetuity = $3,580
Q: Gateway Communications is considering a project with an initial fixed assets cost of $1.47 million…
A: NPV is also known as Net Present Value. It is a capital budgeting technique which helps in decision…
Q: On the London Metals Exchange, the price for copper to be delivered in one year is $5,500 a ton.…
A: It represents both the inflow as well as outflow of the amount from the organisation is termed cash…
Q: Inc. has done the following projections for its balance sheet: total assets of $85 million, current…
A: Debt ratio shows how much is the total debt in total assets and this ratio remain fixed in new…
Q: how did you get .88496 in year 1? I input 1/1(1+13)^1 into excel and got a different answer.
A: We need to use present value formula to calculate value today of future payment.WherePV = present…
Q: How much would you be willing to pay for a $1,000 bond that has a coupon rate of 7%, with 14 years…
A: Current price of bond is that price which can be paid for purchase of the bond. It is also called…
Q: Subordinated debentures are higher order claimants (i.e. paid out earlier) compared to mortgage bond…
A: Subordinated debentures is a type of an unsecured loan. It is a junior type of debt and this feature…
Q: You originally purchased a stock for $54 and now its worth $66. What annual rate of interest did you…
A: In this question, we are required to calculate the annual rate of interest.
Q: The ask yield on a 6% coupon Treasury bond maturing in 8 years is 5.488%. If the face value is…
A: Present value of the bond refers to the present value of the interest and maturity value discounted…
Q: You deposit $2,000 at the end of the year (k = 0) into an account that pays interest at a rate of 6%…
A: Here, Amount of Deposit today $ 2,000.00Interest Rate for 1 year 6%compounding…
Q: Record the amount for check #101 in her check register.
A: Since we are not given the current balance of Zoe's Account, the balance after recording the…
Q: Select all that are true with respect to the flow to equity (FTE) approach: Group of answer…
A: There are different type of methods that are used to calculate the total cash flow available to the…
Q: Determine the net present value of for the project
A: Net Present Value (NPV) is a capital budgeting technique that helps in evaluating various capital…
Q: Consider the table given below to answer the following question. Asset value Earnings Year Net…
A: Stock valuation is the process of determining the intrinsic value of a company's stock. Various…
Q: rek deposited $700 at the end of every month into an RRSP for 7 years. The interest rate earned was…
A: Compound interest is a financial concept in which the interest generated on an initial sum of money,…
Q: Problem 8-6 Profitability Index (L03) The following are the cash flows of two projects: Project B $…
A: The profitability index is used to determine the attractiveness of an investment. It is computed by…
Q: uppose you just won the state eceiving $2,550,000 today or $: ayment starting one year from econd…
A: Today money=$2550000Annual payment=$270000Period=18 yearsrequired is interest rate.
Q: What is the value of a new $1,000 par value bond
A: Price of the bond is the PV of all future coupons and par value discounted at the YTM. Now in this…
Q: Erica purchases a retirement annuity that will pay her $1,500 at the end of every six months for the…
A: Purchase price of annuity would be the present value of payments received from annuity based on time…
Q: A put provision gives the investor the right but not the obligation to sell the bond back to the…
A: Bonds usually have two types of provisions – put provisions and call provisions.In case of a put…
Q: Spicy Ice Cream Co. is considering a three-year project with annual operating cash flows (OCF) of…
A: Net Present Value = Present value of future cash flows - Initial Investment
Q: mannual Compounding now January 1. You plan to make a total of 5 deposits of $500 each, one every 6…
A: a.First we have to calculate the future value of 5 deposits of $500 each made every 6…
Q: Suppose the Bank of Montreal is offering a 30-year mortgage with an EAR of 5.500%. If you plan to…
A: Given information,Annual rate: Years: yearsCompounding Frequency: MonthlyAmount: To compute,monthly…
Q: Scenario A car manufacturing company loses 40% of its market share and has a declining investment in…
A: The yield is the annual rate of return that an investor would get if they held the bond until…
Q: Ogren Corporation is considering purchasing a new spectrometer for the firm's R&D department. The…
A: NPV is also known as Net Present Value. It is a capital budgeting technique which helps in decision…
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
- Derry Corporation is expected to have an EBIT of $2,600,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $195,000, $100,000, and $200,000, respectively. All are expected to grow at 17 percent per year for four years. The company currently has $14,500,000 in debt and 810,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 2.3 percent, indefinitely. The company’s WACC is 8.6 percent and the tax rate is 23 percent. What is the price per share of the company's stock? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.Derry Corporation is expected to have an EBIT of $2,300,000 next year. Increases in depreciation, the increase in net working capital, and capital spending are expected to be $160,000, $100,000, and $140,000, respectively. All are expected to grow at 19 percent per year for four years. The company currently has $12,000,000 in debt and 1,000,000 shares outstanding. At Year 5, you believe that the company's sales will be $18,910,000 and the appropriate price-sales ratio is 2.5. The company’s WACC is 8.8 percent and the tax rate is 25 percent. What is the price per share of the company's stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Answer is complete but not entirely correct. Share price $26.94selected answer incorrectPearl Corp. is expected to have an EBIT of $2,900,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $160,000, $130,000, and $170,000, respectively. All are expected to grow at 19 percent per year for four years. The company currently has $15,000,000 in debt and 1,300,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3 percent indefinitely. The company’s WACC is 8.5 percent and the tax rate is 21 percent. What is the price per share of the company's stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
- Derry Corporation is expected to have an EBIT of $2,950,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $230,000, $135,000, and $235,000, respectively. All are expected to grow at 18 percent per year for four years. The company currently has $18,000,000 in debt and 845,000 shares outstanding. At Year 5, you believe that the company's sales will be $28,400,000 and the appropriate price-sales ratio is 3.1. The company’s WACC is 9.4 percent and the tax rate is 25 percent. What is the price per share of the company's stock? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.Pearl Corp. is expected to have an EBIT of $2,400,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $160,000, $105,000, and $145,000, respectively. All are expected to grow at 20 percent per year for four years. The company currently has $12,500,000 in debt and 1,050,000 shares outstanding. At Year 5, you believe that the company's sales will be $20,400,000 and the appropriate price-sales ratio is 2.6. The company’s WACC is 8.9 percent and the tax rate is 21 percent. What is the price per share of the company's stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)Pearl Corp. is expected to have an EBIT of $1,900,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $160,000, $80,000, and $120,000, respectively. All are expected to grow at 15 percent per year for four years. The company currently has $10,000,000 in debt and 800,000 shares outstanding. At Year 5, you believe that the company's sales will be $13,620,000 and the appropriate price-sales ratio is 2.1. The company’s WACC is 8.4 percent and the tax rate is 21 percent. What is the price per share of the company's stock?
- Dewey Corp. is expected to have an EBIT of $2,850,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $220,000, $125,000, and $225,000, respectively. All are expected to grow at 16 percent per year for four years. The company currently has $17,000,000 in debt and 835,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 2.8 percent indefinitely. The company’s WACC is 9.2 percent and the tax rate is 23 percent. What is the price per share of the company's stock?Derry Corporation is expected to have an EBIT of $3,300,000 next year. Increases in depreciation, the increase in net working capital, and capital spending are expected to be $160,000, $150,000, and $190,000, respectively. All are expected to grow at 17 percent per year for four years. The company currently has $17,000,000 in debt and 1,500,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.5 percent indefinitely. The company’s WACC is 8.9 percent and the tax rate is 25 percent. What is the price per share of the company's stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Please avoid answers in images thank youCrarytown Motors is expected to have an EBIT of $680,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $45,000, $9,000, and $40,000respectively. All cash flow items are expected to grow at 6 percent per year for two years. After Year 3, the CFA is expected to grow at 3 percent indefinitely. The company currently has $3.5 million in debt and 250,000 shares outstanding The company's WACC is 9.5 percent and the tax rate is 20 percent. What is the present value of terminal value? Show your steps.
- Crazytown Motors is expected to have an EBIT of $680,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $45,000, $9,000, and $40,000, respectively. All cash flow items are expected to grow at 6 percent per year for two years. After Year 3, the CFA is expected to grow at 3 percent indefinitely. The company currently has $3 million in debt and 250,000 shares outstanding. The company's WACC is 9.5 percent and the tax rate is 20 percent. What is the present value of terminal value? Show your steps. What is the price per share of the company's stock? Show your steps.Franktown Motors is expected to have an EBIT of $2.2 million next year. Depreciation, the increase in net working capital, and capital spending are expected to be $158,000, $92,000, and $114,000, respectively. All are expected to grow at 15 percent per year for four years. The firm currently has $12 million in debt and 750,000 shares outstanding. After year 5, the adjusted cash flow from assets is expected to grow at 2.5 percent indefinitely. The company’s WACC is 8.7 percent and the tax rate is 34 percent. What is the price per share of the company’s stock? $27.82 $29.34 $22.07 $26.12 $16.47Berea Resources is planning a$75million capital expenditure program for the coming vear. Next year, Berea expects to report to the IR5 earnings of s40 milion after interest and tanes The company presently has 22 milion shares of commoo stock issued and outstanding. Dividend payments are expected to increase from the present level of s8 millon co 512 manion, The company expects its current asset needs to increase from a current level of$22millon to$27malion, Current liabilibes, exduding short-tern bank berrowirgs, are expected to incease from$13million to$18milion. Interest payments are s5 milion next year, and long-term debt retiremert obligations are$6million next year. Deoreciation next year is expectad to be$16million on the company's financial statements, but the company will report depreciation of$19million for tax purposes. How much extemal financing is required by Berea for the coming yean? Enter your answer in malions. For example, an answer of tt milion should be enternd as 1,…