Konawalski’s Kustom Erdapfel Chips, Inc., is the maker of gourmet German-style potato chips. The company began business three years ago in rural North Carolina and grew quickly as the product became known. Konawalski is now poised for national growth. Some analysts call the firm the next Krispy Kreme. The company pays a dividend of $0.10 per share. Earnings per share are currently $0.40, and analysts expect both earnings and dividends to grow at 20 percent per year for the next 5 years. The stock price is expected to increase in value by 70 percent over the next 3 years. If you believe that investors require a 20 percent rate of return on a stock of this risk, what price would you recommend as the IPO price for Konawalski? Use Table II to answer the question. Do not round intermediate calculations. Round your answer to the nearest cent.

Kelsey​ Drums, Inc., is a​ well-established supplier of fine percussion instruments to orchestras all over the United States. The​ company's class A common stock has paid a dividend of ​$4.11 per share per year for the last 19 years. Management expects to continue to pay at that amount for the foreseeable future. Kim Arnold purchased 100 shares of Kelsey class A common 8 years ago at a time when the required rate of return for the stock was 7.6​%. She wants to sell her shares today. The current required rate of return for the stock is 2.60​%. How much total capital gain or loss will Kim have on her​ shares?

Verano Inc. has two business divisions – a software product line and a waste water clean-up product line. The software business has a cost of equity capital of 14% and the waste water clean-up business has a cost of equity capital of 6%. Verano has 50% of its revenue from software and the rest from the waste water business. Verano is considering a purchase of another company in the waste water business using equity financing. What is the appropriate cost of capital to evaluate the business? O A. 10% О В. 6% О С. 9% O D. 14%

Permian Partners (PP) produces from aging oil fields in west Texas. Production is currently 1.94 million barrels per year, but is declining at 5% per year for the foreseeable future. Costs of production, transportation, and administration add up to $26.40 per barrel. The current oil price is $66.40 per barrel.   PP has 8.4 million shares outstanding. The cost of equity is 7%. All of PP’s net income is distributed as dividends. For simplicity, assume that the company will stay in business forever and that costs per barrel are constant at $26.40. Also, ignore taxes.   a.Assume that oil prices are expected to fall to $61.40 per barrel next year, and to $56.40 and $51.40 per barrel in the two years following. After that decrease, assume a long-term trend of oil-price increases at 3% per year. What is the value of one PP share?   b-1.What is PP’s E/P ratio?   b-2.Is it equal to the 7% cost of capital?

Help Save & Ex Chee Ethelbert.com is a young software company owned by two entrepreneurs. It currently needs to raise $918,400 to support its expansion plans. A venture capitalist is prepared to provide the cash in return for a 40% holding in the company. Under the plans for the investment, the VC will hold 16,400 shares in the company and the two entrepreneurs will have combined holdings of 24,600 shares. a. What is the total after-the-money valuation of the firm? (Enter your answer in dollars not millions.) Valuation of the firm b. What value is the venture capitalist placing on each share? Value of each share < Prev 2 of 8 Next m arch hp 寻

Assume you have just been hired as a business manager of PizzaPalace, a regional pizza restaurant chain. The company’s EBIT was $120 million last year and is not expected to grow. PizzaPalace is in the 25% state-plus-federal tax bracket, the risk-free rate is 6 percent, and the market risk premium is 6 percent. The firm is currently financed with all equity, and it has 10 million shares outstanding. When you took your corporate finance course, your instructor stated that most firms’ owners would be financially better off if the firms used some debt. When you suggested this to your new boss, he encouraged you to pursue the idea. If the company were to recapitalize, then debt would be issued, and the funds received would be used to repurchase stock. As a first step, assume that you obtained from the firm’s investment banker the following estimated costs of debt for the firm at different capital structures: Percent Financed with Debt, Wd Rd 0%   20% 8.0% 30% 8.5% 40% 10.0%…

Kelsey​ Drums, Inc., is a​ well-established supplier of fine percussion instruments to orchestras all over the United States. The​ company's class A common stock has paid a dividend of ​$4.84 per share per year for the last 14 years. Management expects to continue to pay at that amount for the foreseeable future. Kim Arnold purchased 300 shares of Kelsey class A common 5 years ago at a time when the required rate of return for the stock was 8.3​%. She wants to sell her shares today. The current required rate of return for the stock is 5.30​%. How much total capital gain or loss will Kim have on her​ shares?   1. The value of the stock when Kim purchased it was ​$____per share.  ​(Round to the nearest​ cent.) 2.The value of the stock if Kim sells her shares today is ​$_______ per share.  ​(Round to the nearest​ cent.) 3. The total capital gain​ (or loss) Kim will have on her shares is ​$_______. ​(Round to the nearest dollar. Enter a positive number for a capital gain and a negative…