National Inc. recently reported net income of P1,500,000. The company has 300,000 shares of common stock, and it currently trades at P65 a share. The company continues to expand and anticipates that one year from now its net income will be P2,500,000. Over the next year the company also anticipates issuing an additional 100,000 shares of stock, so that one year from now the company will have 400,000 shares of common stock. Assuming the company’s price/earnings ratio remains at its current level, what will be the company’s stock price one year from now?
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National Inc. recently reported net income of P1,500,000. The company has 300,000 shares of common stock, and it currently trades at P65 a share. The company continues to expand and anticipates that one year from now its net income will be P2,500,000. Over the next year the company also anticipates issuing an additional 100,000 shares of stock, so that one year from now the company will have 400,000 shares of common stock. Assuming the company’s price/earnings ratio remains at its current level, what will be the company’s stock price one year from now?
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- Ferrell Inc. recently reported net income of $8 million. It has 620,000 shares of common stock, which currently trades at $25 a share. Ferrell continues to expand and anticipates that 1 year from now, its net income will be $13.2 million. Over the next year, it also anticipates issuing an additional 62,000 shares of stock so that 1 year from now it will have 682,000 shares of common stock. Assuming Ferrell's price/earnings ratio remains at its current level, what will be its stock price 1 year from now? Do not round intermediate calculations. Round your answer to the nearest cent.FA corporation recently reported a net ncome of $2,000,000. The company has 500,000 shares of common stock that currently trade for $40 per share . The company continues to expand and anticipates that one year from now its net income will be $3.25 million. Over the next yesr the company also anticipates issuing an additional 150,000 shares ,so that one year from now the company will have 650,000 shares of common stock . a) Assuming the company's price to earnings ratio remains at its current level, what will be the company's stock price one year from now ? b) The PE ratio is a very common method used by investors to get a quick calculation on the market's perception of a company. Evaluate the fornula used to calculate the PE ration focusing on the limitations of this method of valuation ?Ferrell Inc. recently reported net income of $8 million. It has540,000 shares of common stock, which currently trades at $21 a share. Ferrell continuesto expand and anticipates that 1 year from now its net income will be $13.2million. Over the next year, it also anticipates issuing an additional 81,000 shares ofstock so that 1 year from now it will have 621,000 shares of common stock. AssumingFerrell’s price/earnings ratio remains at its current level, what will be its stock price1 year from now?
- The Link Resport & Spa Company has 75,000 shares of stock outstanding. The company is expected to have total earnings next year of $500,000. The company plans to reinvest $275,000 in projects earning an (equity) return of 15%, and to return the remainder of its earnings to shareholders in the form of dividends or stock repurchases. The first dividend or repurchse payments will be made exactly one year from today. In all future years, the market expects the company's reinvestment rate and the return on reinvested earnings to remain constant. The required return on equity is 12%. What is the value of the firm today, if it 1.) uses the remaining $225,000 to pay dividends, and will continue this payout policy (as a percent of earnings) in future years? 2) uses 40% of its annual payout to repurchase stock, and uses the remainder to pay divdends (and will continue this policy in future years)? Assume that the firm will use the remaining $225,000 to pay dividends (and will continue this…Lightbridge corporation has 500,000 shares of common stock that currently trade for $40 per share. The net income reported for last year is $2,000,000. Their expansion is expected to continue, and they estimate that at the end of this year their income will be $3,250,000. In this coming year they will need extra financing and expect to issue an additional 150,000 shares of common stock. Thus, one year from now the company will have 650,000 common shares outstanding. Assuming the company’s price to earnings ratio remains at its current level, what will be the company’s stock price one year from now?Lightbridge corporation has 500,000 shares of common stock that currently trade for $40 per share. The net income reported for last year is $2,000,000. Their expansion is expected to continue, and they estimate that at the end of this year their income will be $3,250,000. In this coming year they will need extra financing and expect to issue an additional 150,000 shares of common stock. Thus, one year from now the company will have 650,000 common shares outstanding. 1)Assuming the company’s price to earnings ratio remains at its current level, what will be the company’s stock price one year from now? 2)The PE ratio is a very common method used by investors to get a quick calculation on the market’s perception of a company. Evaluate the formula used to calculate the PE ratio focusing on the limitations of this method of valuation?
- Atlantic Northern Inc. just reported a net income of $11,000,000, and its current stock price is $36.75 per share. Atlantic Northern is forecasting an increase of 25% for its net income next year, but it also expects it will have to issue 2,100,000 new shares of stock (raising its shares outstanding from 5,500,000 shares to 7,600,000 shares). If Atlantic Northern's forecast turns out to be correct and its price-to-earnings (P/E) ratio does not change, what does management expect its stock price to be one year from now? $33.26 per share $36.75 per share $24.95 per share $41.57 per share One year later, Atlantic Northern Inc.'s stock is trading at $40.75, and the company reports its common equity value as $50,555,200. What is Atlantic Northern Inc.'s market-to-book (M/B) ratio? Is it possible for a company to have a negative EPS and thus a negative P/E ratio?Atlantic Northern Inc. just reported a net income of $5,000,000, and its current stock price is $25.75 per share. Atlantic Northern is forecasting an increase of 25% for its net income next year, but it also expects it will have to issue 1,500,000 new shares of stock (raising its shares outstanding from 5,500,000 shares to 7,000,000 shares). If Atlantic Northern's forecast turns out to be correct and its price-to-earnings (P/E) ratio does not change, what does management expect its stock price to be one year from now? $25.18 per share O $25.75 per share O$18.88 per share $31.48 per share One year later, Atlantic Northern Inc.'s stock is trading at $43.50, and the company reports its common equity value as $35,252,000. What is Atlantic Northern Inc.'s market-to-book (M/B) ratio? 8.63x Is it possible for a company to have a negative EPS and thus a negative P/E ratio? Yes vAt the end of 2020, CVN ltd. had 120,000 shares of common stock outstanding and had earnings availablefor common of $300,000. TPO ltd., at the end of 2020, had 15,000 shares of common stock outstanding andhad earned $28,000 for common shareholders. CVN’s earnings are expected to grow at an annual rate of 6%in next 6 years, and TPO’s growth rate in earnings would be 12% per year in next 6 years. Calculate earnings per share (EPS) for CVN and TPO for year 2020 and each of the next 6 years if CVNacquires TPO at a ratio of exchange of 1.3. Describe the initial effect and long run effect on EPS of CVN and TPO. Does merger look beneficial forCVN and TPO? Why or why not?
- Soylent Corp expects to generate earnings over the coming twelve months of $$6.656.65 per share (i.e. at t=11). It has a share price today of $$49.2849.28. The firm has a policy of paying out 34.034.0% of its earnings each year as dividends to shareholders and of reinvesting the remaining 66.066.0% into new projects. Reinvested earnings provide a return on new investment of 15.215.2% per annum. However, due to a disappearing customer base, Soylent Corp will soon announce that the firm will begin paying out 69.069.0% of its earnings as dividends, retaining now 31.031.0% for investment in new projects. The return provided by earnings reinvested in new projects will remain at 15.215.2% per annum for the foreseeable future. a) What will be the share price after this announcement? Investors are not expecting the firm to change its payout policy. The share price for Soylent Corp after this announcement will beLittle Oil has 1 million outstanding shares with a total market value of $20 million. The firm is expected to pay $1 million of dividends next year, and thereafter the amount paid out is expected to grow by 5 percent a year in perpetuity. Thus the expected dividend in year 2 is $1.05 million, and so on. However, the company has heard that the value of a share depends on the flow of dividends, and therefore it announces that next year’s dividend will be increased to $2 million and that the extra cash will be raised immediately by a simultaneous issue of new shares. After that, the total amount paid out each year will be as previously forecasted, i.e., $1.05 million in year 2 and increasing by 5 percent a year in each subsequent year. Capital markets are perfect. The discount rate for equity for this company is 10%. a) At what price will the new shares be issued in year 1? b) How many shares will the firm need to issue? c) What will be the expected payments on these new shares,…Taggart Goods Corp. just reported a net income of $11,000,000, and its current stock price is $23.00 per share. Taggart is forecasting an increase of 25% for its net income next year, but it also expects it will have to issue 2,300,000 new shares of stock (raising its shares outstanding from 5,500,000 shares to 7,800,000 shares). If Taggart’s forecast turns out to be correct and its price-to-earnings (P/E) ratio does not change, what does management expect its stock price to be one year from now? $20.24 per share $23.00 per share $15.18 per share $25.30 per share One year later, Taggart Goods Corp.’s stock is trading at $38.00, and the company reports its common equity value as $31,574,400. What is Taggart Goods Corp.’s market-to-book (M/B) ratio? Is it possible for a company to have a negative EPS and thus a negative P/E ratio?.