Edmund Enterprises recently made a large investment to upgrade its technology. Although these improvements won’t have much effect on performance in the short run, they are expected to reduce future costs significantly. What effect will this investment have onEdmund Enterprises’ earnings per share this year? What effect might this investment have on the company’s intrinsic value and stock price?
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Edmund Enterprises recently made a large investment to upgrade its technology. Although these improvements won’t have much effect on performance in the short run, they are expected to reduce future costs significantly. What effect will this investment have on
Edmund Enterprises’ earnings per share this year? What effect might this investment have on the company’s intrinsic value and stock price?
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- Miguel Enterprises recently made a large investment to upgrade its technology. While these improvements won't have much effect on performance in the short run, they are expected to reduce future costs significantly. What effect will this investment have on Miguel Enterprises' earnings per share this year? What effect might this investment have on the company's intrinsic value and stock price?Ezekiel Enterprises recently made a large investment to upgrade its technology. Whilethese improvements won’t have much effect on performance in the short run, they areexpected to reduce future costs significantly. What effect will this investment have onEzekiel Enterprises’ earnings per share this year? What effect might this investment haveon the company’s intrinsic value and stock price?1. Edmund Enterprises recently made a large investment to upgrade its technology. Although these improvements won’t have much effect on performance in the short run, they are expected to reduce future costs significantly. What effect will this investment have on Edmund Enterprises’ earnings per share this year? What effect might this investment have on the company’s intrinsic value and stock price? 2. Suppose you are a director of an energy company that has three divisions—natural gas, oil, and retail (gas stations). These divisions operate independently from one another, but all division managers report to the firm’s CEO. If you were on the compensation committee, as discussed in Question 1-12, and your committee was asked to set the compensation for the three division managers, would you use the same criteria as that used for the firm’s CEO? Explain your reasoning
- Edmund Corporation recently made a large investment to upgrade itstechnology. Although these improvements won’t have much of an impacton performance in the short run, they are expected to reduce future costssignificantly. What impact will this investment have on Edmund’s earningsper share this year? What impact might this investment have on thecompany’s intrinsic value and stock price?If the firm is in a very competitive, mature industry, what effect will the competitive conditions have on residual income for the firm and others in the industry? Now suppose the firm holds a competitive advantage in its industry, but the advantage is not likely to be sustainable for more than a few years. As the firm’s competitive advantage diminishes, what effect will that have on that firm’s residual income? and If a firm’s residual income for a particular year is positive, does that mean the firm was profitable? Explain. If a firm’s residual income for a particular year is negative, does that mean the firm necessarily reported a loss on the income statement? Explain. What does it mean when a firm’s residual income is zero?If a company invests $100 million today which will not produce any impact in the near future, but will produce large cost savings in the future, what impact will this have on earnings per share in the current year?
- A company expects sales to increase during the coming year, and it is using the AFN equation to forecast the additional capital that it must raise. Which of the following conditions would cause the AFN to increase? a. The company's profit margin increases. b. The company previously thought its fixed assets were being operated at full capacity, but now it learns that it actually has excess capacity. c. The company increases its dividend payout ratio. d. The company decides to stop taking discounts on purchased materials. e. The company begins to pay employees monthly rather than weekly.You are trying to value Lucid Motors using comparables analysis. You believe Lucid Motors should be valued similarly to TSLA and that TSLA is the only reasonable comparison. TSLA is currently trading at 10.7x Enterprise Value/Revenue. Lucid is expected to generate $2.2bn in revenues this year. How mucb should you be willing to value Lucid in terms of enterprise Value (assuming market is correct)? $20.6bn $23.5bn $15.4 bn $21.7 bnA company expects sales to increase during the coming year, and it is using the AFN equation to forecast the additional capital that it must raise. Which of the following conditions would cause the AFN to DECREASE? Group of answer choices: The company begins to pay employees weekly rather than monthly. The company decides to take discounts on purchased materials. The company’s profit margin increases. The company learns that it has no excess capacity. The company increases its dividend payout ratio.
- suppose a company's return on invested capital is less than its wacc. what happens to the value of operations if the sales growth increases? Explain your answerAs companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company's stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $2.40 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 20.00% over the next year. After the next year, though, Portman's dividend is expected to grow at a constant rate of 4.00% per year. Term Value The risk-free rate (RF) is 5.00%, the market risk premium (RPM) is 6.00%, and Portman's beta is 1.70. Dividends one year from now (D1) Horizon value (P1) ☑ Intrinsic value of Portman's stock ་ Assuming that the market is in equilibrium, use the information just given to complete the…As companies evolve, certain factors can drive sudden growth. This may lead to a period of nonconstant, or variable, growth. This would cause the expected growth rate to increase or decrease, thereby affecting the valuation model. For companies in such situations, you would refer to the variable, or nonconstant, growth model for the valuation of the company’s stock. Consider the case of Portman Industries: Portman Industries just paid a dividend of $2.40 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 20.00% over the next year. After the next year, though, Portman’s dividend is expected to grow at a constant rate of 4.00% per year. Assuming that the market is in equilibrium, use the information just given to complete the table. Term Value Dividends one year from now (D₁) Horizon value (Pˆ1P̂1) Intrinsic value of Portman’s stock The risk-free rate (rRFrRF) is 5.00%, the market risk…