Sinaloa Appliance, Inc., a private firm that manufactures home appliances, has hired you to estimate the company's beta. You have obtained the following equity betas for publicly traded firms that also manufacture home appliances. Firm iRobot Middleby's National Presto Newell Brands Whirlpool Beta 0.95 1.90 0.15 1.10 1.80 Asset beta ($ millions) Debt $0 765 0 11,948 4,525 Market Value of Equity $3,290 7,530 860 26,870 14,330 a. Estimate an asset beta for Sinaloa Appliance. (Round intermediate calculations and final answer to 3 decimal places.)

Sinaloa Appliance, Inc., a private firm that manufactures home appliances, has hired you to estimate the company's beta. You have obtained the following equity betas for publicly traded firms that also manufacture home appliances. Firm iRobot Middleby's National Presto Newell Brands Whirlpool Beta 0.95 1.90 0.15 1.10 1.80 Asset beta ($ millions) Debt $0 765 0 11,948 4,525 Market Value of Equity $3,290 7,530 860 26,870 14,330 a. Estimate an asset beta for Sinaloa Appliance. (Round intermediate calculations and final answer to 3 decimal places.)

Financial Accounting

15th Edition

ISBN:9781337272124

Author:Carl Warren, James M. Reeve, Jonathan Duchac

Publisher:Carl Warren, James M. Reeve, Jonathan Duchac

Chapter15: Investments And Fair Value Accounting

Section: Chapter Questions

Problem 2CP

See similar textbooks

Similar questions

Triano Train Transports shows the following on their most recent balance sheet: Current Assets: 1871Total Liabilities: 1994Inventory: 458Net working Capital: 1111Total Assets: 3007Total Equity: 1636Total Debt: 2602Earnings per Share: 3.22Market Value: 60.03 You want to identify if the company is highly leveraged and therefore a higher risk for you as an investor. Specifically, you want to find out how much debt the company has in comparison to each dollar of equity. Determine which ratio to use, calculate it and put the number in the answer.
Narrative: You are an aspiring stockholder with a 1,000,000 budget to invest in stocks. As a (https://www.pesobility.com/stock) to result, you find yourself looking at the internet research the different companies where you can invest your million. Image 1.0: Screenshot of the stock table from https://www.pesobility.com/stock I Image 1.1 Bank Image 1.2 Information Technology Image 1.3 Media Image 2.0: List of Chosen Companies to Invest Image 2.1 Bank Image 2.2 Information Technology Image 2.3 Media
Your friend, Leo, is considering investing in a newly listed company on the JSE, known as Abital Ltd. She comes to you for advice about whether to invest in their bonds or shares, and has collected the following information from the recently published financial statements: Number of outstanding shares 10 000 000 Earnings after tax 25 000 000 Retention ratio 35% Cost of equity 15% Current market price of one share R10 Number of Bonds outstanding 4 000 000 Abital Ltd recently acquired a patent that expires in 3 years. Their earnings are therefore expected to grow at 20% during these 3 years, after which it will decline to a constant 5%. What is the intrinsic value of Abital ltd?
3. Using your iphone, you noticed that IBM was trading at a bargain price, so you decided to purchase 100 shares of stock that is traded on the New York Stock Exchange using your primary stock trading app. What kind of transaction was this? Primary market Secondary market Futures market Private Placement 4. P&G reported the following information for its fiscal year end: On net sales of $51.4 billion, the company earned net income after taxes of $6.5 billion. It had cost of goods sold of $25.1 billion and EBIT of $9.8 billion. Using the information in question 3, calculate the gross margin Using the information in question 3, calculate the operating margin (EBIT margin) Using the information in question 3, calculate the net profit margin
Use the internet to find a publicly-held companys annual report. Locate the section that comments on the Stockholders Equity section of the financial reports. What additional insights are you able to learn by looking further into the commentary? Is there anything that surprised you or that you think is missing and could help you if you were deciding whether to invest $100,000 of your savings in this companys stock?
A translate.google.com.om/?hl%3Den&tab3rT&sl%3Den&tl=ar&text%3DThe%20compan = Google Translate DETECT LANGUAGE ENGLISH ARABIC SPANISH The company capital structure consists of debt 250000 at 0.042, preferred stock 230000 at 11% and common stock 120000 at 14%, calculate company's weighted average cost of capital Select one: a. 0.0596 b. All the given choices are not correct c. 0.0876 d. 0.0455 e. 0.0175 P Type here to search
You are the new CFO of Risk SurfingLtd, whichhas current assets of $7,920, net fixed assets of $17,700, current liabilities of $4,580 and long-termdebts of $5,890. Required:a.What are the three important questions of corporate financeyou will need to address? Please briefly explain them and indicate how they are related to the areas in the balance sheet of a company.b.Calculate owners’ equity and build a balance sheet for the company? c.How much is net working capital of the company? d.Calculatethe return on assets of the company giventhat Return on Equity is 30%?e.What is the PE of the company total number of ordinary share outstanding of the companies is 2,000 and market price of each share is $12?
Three years ago, you founded Outdoor Recreation, Inc., a retailer specializing in the sale of equipment and clothing for recreational activities such as camping, skiing, and hiking. So far, your company has gone through three funding rounds: Round Founder Seed Series A Date Feb. 2020 Aug. 2021 Sept. 2022 Investor Shares Share Price ($) You Angels Venture Capital 5,000,000 1,000,000 4,000,000 1.00 2.00 3.50 Currently, it is 2023 and you need to raise additional capital to expand your business. You have decided to take your firm public through an IPO. You would like to issue an additional 6.0 million new shares through this IPO. You currently have $5.0 million in cash (net of debt), and forecast earnings before interest and taxes of $7.5 million this year. a. Your investment banker advises you that the prices of other recent IPOs have been set such that the enterprise value/EBIT ratios based on 2023 forecasted earnings average 20.0 x. Assuming that your IPO is set at a price that implies…
Sibongile is considering investing in a newly listed company on the JSE, known as Abital Ltd. She comes to you for advice about whether to invest in their bonds or shares, and has collected the following information from the recently published financial statements: Number of outstanding shares 10 000 000 Earnings 25 000 000 Payout ratio 35% Cost of equity 11% Current market price of one share R10 Number of Bonds outstanding 4 000 000 Abital Ltd recently acquired a patent that expires in 3 years. Their earnings are therefore expected to grow at 20% during these 3 years, after which it will decline to a constant 5%. What is the intrinsic value of Abital ltd?
For the following four IPOs, please find the total amount raised, the amount that went to the firm, and the amount that went to the underwriters/investment banks, and the gross spread. This information is available on the SEC Edgar database. Total S Amount S Raised by the SAmount Paid to S Offer S Bid Gross Raised Investment Banks Price Price Issuer Spread % Wingstop Shake Shack Alibaba Wingstop
You are an investment adviser. One of your clients approaches you for your advice on investing in equity sharesof Alpha Company. You have collected the following data:Earnings per share last year $5.00Payout ratio 0.30Return on equity 0.30Cost of equity capital 0.25The company plans to increase the payout ratio to 40% from year 6.Required:i) Estimate the price of an equity share of this company using an appropriate dividend discount modeland advise your client whether they should buy a share of the company.ii) Your client is keen to know whether there are any positive growth opportunities from theirinvestment. Explain to your client the meaning of this concept using appropriate calculations.
Based on the following information, what is the highest price per share you should be willing to pay for Bank D? Bank A Bank B Bank C Bank D. Shares (1000s) 641 1361 729 1180 $21.76 2) $33.19 $47.71 $54.75 $60.71 Price Net Per Share 80.85 53.57 32.20 Income (1000s) 3141 5880 2194 4342