You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $4,050,000 this year. Depreciation, the increase in net working capital, and capital spending were $285,000, $139,000, and $535,000, respectively. You expect that over the next five years, EBIT will grow at 15 percent per year, depreciation and capital spending will grow at 20 per year, and NWC will grow at 10 per year. The company has $23,500,000 in debt and 440,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.4 percent, indefinitely. The company's WACC is 9.45 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. Share price
Q: If the risk premium on the stock market was 6.69 percent and the risk-free rate was 2.51 percent,…
A: The stock market return is the overall market return that is expected from a stock of similar…
Q: Wonka Candy Inc. would like to buy a new machine that would automatically dip chocolates. The…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
Q: These calculations are repeated for every month of the project. Cash Flow Statement Bought Forward…
A: Cash Flow Statement Bought Forward January February March April MayJune: $5,000Income: $10,000Total$…
Q: Orwell Building Supplies' last dividend was $2. Its dividend growth rate is expected to be constant…
A: Current Dividend = d0 = $2Growth Rate for next 3 Years = g3 = 25%Growth Rate after 3 Years =…
Q: A company has net income of $7.5 M with a net profit margin of 7.5%, and an EBITA margin of 12%.…
A: EBITDA, or Earnings Before Interest, Taxes, Depreciation, and Amortization, is a financial metric…
Q: Ife takes out a 3 year mortgage for $1,125,000 at an interest rate of i(2) = 4.5009 The amortization…
A: Loan amount=$1125000Period=30 yearsInterest rate=4.5% compounding semi annuallyPayments are…
Q: Assume a company provided the following information: Earnings per share $ 1.20 Number of common…
A: Dividends are the periodic income that the security of the company paying out dividends earns. It is…
Q: In a recent 5-year period, mutual fund manager Diana Sauros produced the following percentage rates…
A: Standard Deviation, a statistical metric crucial in finance, gauges the extent of variability within…
Q: Duo Corporation is evaluating a project with the following cash flows: Year Cash Flow 0 1 2 3 4 5…
A: Modified Internal Rate of Return (MIRR) is a financial metric used in capital budgeting that adjusts…
Q: Find the stock price given that the current dividend is $2 per share, dividends are expected to grow…
A: When the company receives profits and distributes them among the shareholders. That share of profit…
Q: Required: Japan Life Insurance Company Invested $10,000,000 in pure-discount U.S. bonds in May 1995…
A: The rate of return of an investment refers to the profits that the investment provides to the…
Q: You are the manager of the petroleum refining division of a large international conglomerate. You…
A: The objective of the question is to estimate the cost of capital for the project of building an oil…
Q: A firm with a cost of capital of 13.5 percent is evaluating three capital projects. The internal…
A: NPV (Net Present Value) and IRR (Internal Rate of Return) are two common methods used in financial…
Q: Samuel decides to buy call options in Singapore dollars. What will be Samuel's break-even spot rate…
A: The break even spot rate for the buyer of call option = Strike rate + premium
Q: Stock prices over 5 months are observed to be $110.00, $115.00, $98.00, $107.00, and $112.00. What…
A: The annualized standard deviation for the given prices of the stock over the months can be found by…
Q: Falon coorperation is using new common stock at a market price of $28.35. Dividends last year were…
A: We will use the dividend discount model here to get the answer.As per the dividend discount model…
Q: Consider the following data for Stock HHH and then answer the questions: Price of Stock HHH Exercise…
A: $3.00 : $6.00
Q: Slow 'n Steady Enterprises currently pays an annual dividend of $1.40 /share. Investors expect that…
A: The present value of stock with indefinite dividend payment with no growth is the dividend divided…
Q: years. The interest rate is i(12) = 8.750%. What is the outstanding balance on the loan just after…
A: The time value of money recognizes the idea that the value of an amount of money today differs from…
Q: Ying Import has several bond issues outstanding, each making semiannual interest payments. The bonds…
A: After tax cost of debt = Before tax cost of debt * (1-tax rate)Before tax cost of debt = YTM of the…
Q: A wealthy graduate of a local university wants to establish a scholarship to cover the full cost of…
A: Present value of perpetual cash flows is computed as follows:-PV= wherePV= Present value of…
Q: (a)Begin by filling down the values 1 to 360 in your Month column. You purchase a home for $115000…
A: Amount of loan = $115,000-$23,000 = $92,000Interest rate = 6.5%Period = 30 yearsNumber of Payments…
Q: Suppose that the value of the S&P 500 stock index is 4,800. Required: a. If each E-mini futures…
A: Futures contracts are standardized financial agreements traded on organized exchanges, obligating…
Q: Long-Term Financing Needed At year-end 2018, Wallace Landscaping's total assets were $1.91 million,…
A: a. Total assets = $1.91 millionAccounts payable = $525,000Common stock = $530,000Retained earnings =…
Q: A property was purchased for $5170.00 down and payments of $1588.00 at the end of every three months…
A: Purchase price refers to the price at which the property is to be purchased by the purchaser from…
Q: Suppose that there is an upward shift in the expected rate of return on the risky asset, from 15% to…
A: The Capital Allocation Line (CAL) is a crucial concept in finance that illustrates the trade-off…
Q: Student question Time Left : 00:09:33 (15 pts) An unlevered firm has 1000 shares outstanding and…
A: The Common Stock Required Rate of Return (r) is a fundamental financial metric representing the…
Q: You were hired as a consultant to Quigley Company, whose target capital structure is 35% debt, 10%…
A: The objective of the question is to calculate the Weighted Average Cost of Capital (WACC) for…
Q: a. What is your profit at the current exchange rate? (Do not round intermediate calculations and…
A:
Q: Is there a good argument against giving long-term shareholders more say in running a corporation?…
A: The topic involves assessing the validity of arguments against granting increased influence to…
Q: S. Bouchard and Company hired you as a consultant to help estimate its cost of common equity. You…
A: As per DCF,P = D1 / (Ke-g)P=stock priceD1=value of next year dividendKe=constant cost of equity…
Q: eases 3 years Create a table with: interest ranging from 0% o 50% increasing by 5% increments NPV…
A: Net present value is determined by deducting the initial investment from the current value of cash…
Q: Your division is considering two projects with the following cash flows (in millions): 2 3 Project A…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
Q: what is the new NPV of the project?
A: Information on Original problem:Cash inflows:If the franchise is awarded − $8mIf the franchise was…
Q: Perit Industries has $140,000 to invest in one of the following two projects: Project A $ 140,000 $0…
A: Net Present Value is defined as the sum of the present values of all future cash inflows less the…
Q: Determine the future value of the following single amounts. Note: Use tables, Excel, or a financial…
A: Future value includes the amount being deposited and amount of interest accumulated over the period…
Q: Maroon has an expected return of 20%, and a variance of 0.015. Gray has an expected return of 19%,…
A:
Q: A firm evaluates the following projects, when interest rates are 12% for every maturity: Year A B…
A: When a company has projects which are not mutually exclusive and a budget available for more than 1…
Q: • Suppose the current price of a stock is $50 per share. You expected to earn a 10% return on the…
A: When money is invested in ths stock market, then rate of return is earned in the form of dividend…
Q: A project has the following cash flows: Year O2.75 years O 3.55 years O3.35 years O3.15 years O2.95…
A: Payback period .It is a capital budgeting technique used for making investment decisions.It is the…
Q: The management of Unter Corporation, an architectural design firm, is considering an investment with…
A: Investment =$61,000+$5,000=$66,000Cash inflow:YearCash InflowCumulative cash…
Q: $48.29
A: Given :-Current year dividend paid (D0) = $2.37First year Growth= 25%Now First year growth in…
Q: Metallica Bearings, Incorporated, is a young startup company. No dividends will be paid on the stock…
A: price 11 years from today=D12/(Required rate - Growth rate).=$12.50/(13.5%−5.5%).=$12.50/8%=$156.25
Q: A taxpayer operating a small business applied for and received the Main Street Small Business Tax…
A: Job creation and small business support are crucial aspects of fostering economic growth and…
Q: A loan of 25,000 is being repaid with annual payments of 2,243 at the end of the year. The interest…
A: Loan Value = $25,000Interest rate = 7.5%Annual repayment = $2,243
Q: M eBook H Problem Walk-Through Project L requires an initial outlay at t= 0 of $59,000, its expected…
A: Initial Outlay = i = $59,000Cash Flow = cf = $12,000Time = t = 7 Years
Q: Suppose the call option of Tesla company has an exercise price of $200 and expires in 90 days.…
A: Here,Spot Price is $240Strike Price is $200Risk Free Rate is 6.18%Standard Deviation is 40%Time to…
Q: Silky Smooth has an EPS of $3.23 per share and a profit margin of 7.3 percent. If the PS ratio is…
A: The sales per share(SPS) is calculated below
Q: Kim placed an order with her broker for 600 shares of each of three IPOs being offered this week.…
A: The profits refer to the earned income received from the underlying investments and executed trades…
Q: Consider the following information on a portfolio of three stocks: Probability of State of State of…
A: The risk and return of a portfolio are essential considerations for investors. Portfolio risk and…
Trending now
This is a popular solution!
Step by step
Solved in 3 steps with 2 images
- You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $4,650,000 this year. Depreciation, the increase in net working capital, and capital spending were $315,000, $157,000, and $565,000, respectively. You expect that over the next five years, EBIT will grow at 15 percent per year, depreciation and capital spending will grow at 20 per year, and NWC will grow at 10 per year. The company has $26,500,000 in debt and 470,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.6 percent, indefinitely. The company's WACC is 9.75 percent and the tax rate is 24 percent. What is the price per share of the company's stock? Note: not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Share priceYou have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $3,110,000 this year. Depreciation, the increase in net working capital, and capital spending were $238,000, $103,000, and $480,000, respectively. You expect that over the next five years, EBIT will grow at 19 percent per year, depreciation and capital spending will grow at 24 percent per year, and NWC will grow at 14 percent per year. The company currently has $17.7 million in debt and 370,000 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 24 percent. What is the price per share of the company's stock?You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $5,150,000 this year. Depreciation, the increase in net working capital, and capital spending were $340,000, $172,000, and $590,000, respectively. You expect that over the next five years, EBIT will grow at 17 percent per year, depreciation and capital spending will grow at 15 per year, and NWC will grow at 20 per year. The company has $29,000,000 in debt and 495,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.35 percent, indefinitely. The company's WACC is 9.55 percent and the tax rate is 24 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. Answer is complete but not entirely correct. Share price $ 117.88
- You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $2,890,000 this year. Depreciation, the increase in net working capital, and capital spending were $227,000, $92,000, and $425,000, respectively. You expect that over the next five years, EBIT will grow at 18 percent per year, depreciation and capital spending will grow at 23 percent per year, and NWC will grow at 13 percent per year. The company currently has $15.5 million in debt and 415,000 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 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.) Share priceYou have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $3.35 million this year. Depreciation, the increase in net working capital, and capital spending were $295,000, $125,000, and $535,000, respectively. You expect that over the next five years, EBIT will grow at 15 percent per year, depreciation and capital spending will grow at 20 percent per year, and NWC will grow at 10 percent per year. The company has $19.5 million in debt and 400,000 shares outstanding. You believe that sales in Year 5 will be $45.5 million and the price-sales ratio will be 2.15. The company’s WACC is 8.6 percent and the tax rate is 22 percent. What is the price per share of the company's stock?You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $4,350,000 this year. Depreciation, the increase in net working capital, and capital spending were $300,000, $148,000, and $550,000, respectively. You expect that over the next five years, EBIT will grow at 15 percent per year, depreciation and capital spending will grow at 20 per year, and NWC will grow at 10 per year. The company has $25,000,000 in debt and 455,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.55 percent, indefinitely. The company’s WACC is 9.6 percent and the tax rate is 21 percent. What is the price per share of the company's stock? PLEASE NEED THIS ASAP
- You have looked at the current financial statements for Reigle Homes, Co. The company has an EBIT of $2,850,000 this year. Depreciation, the increase in net working capital, and capital spending were $225,000, $90,000, and $415,000, respectively. You expect that over the next five years, EBIT will grow at 16 percent per year, depreciation and capital spending will grow at 21 percent per year, and NWC will grow at 11 percent per year. The company has $15,100,000 in debt and 345,000 shares outstanding. You believe that sales in five years will be $22,600,000 and the price-sales ratio will be 2.4. 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?The following tables contain financial statements for Dynastatics Corporation. Although the company has not been growing, it now plans to expand and will increase net fixed assets (i.e., assets net of depreciation) by $200,000 per year for the next 5 years, and it forecasts that the ratio of revenues to total assets will remain at 1.50. Annual depreciation is 10% of net fixed assets at the beginning of the year. Fixed costs are expected to remain at $60 and variable costs at 80% of revenue. The company's policy is to pay out two- thirds of net income as dividends and to maintain a book debt ratio of 20% of total capital. INCOME STATEMENT, 2019 (Figures in $ thousands) Revenue $1,800 Fixed costs Variable costs (80% of revenue) Depreciation Interest (8% of beginning-of-year debt) Taxable income Taxes (at 40%) 60 1,440 80 24 196 78 Net income 118 Dividends Addition to retained earnings $ 79 $ 39 BALANCE SHEET, YEAR-END (Figures in $ thousands) 2019 Assets Net working capital Fixed assets…The following tables contain financial statements for Dynastatics Corporation. Although the company has not been growing, it now plans to expand and will increase net fixed assets (i.e., assets net of depreciation) by $200,000 per year for the next 5 years, and it forecasts that the ratio of revenues to total assets will remain at 1.50. Annual depreciation is 10% of net fixed assets at the beginning of the year. Fixed costs are expected to remain at $68 and variable costs at 80% of revenue. The company’s policy is to pay out two-thirds of net income as dividends and to maintain a book debt ratio of 20% of total capital. INCOME STATEMENT, 2019(Figures in $ thousands) Revenue $ 1,800 Fixed costs 68 Variable costs (80% of revenue) 1,440 Depreciation 80 Interest (8% of beginning-of-year debt) 24 Taxable income 188 Taxes (at 40%) 75 Net income $ 113 Dividends $ 75 Addition to…
- The following tables contain financial statements for Dynastatics Corporation. Although the company has not been growing, it now plans to expand and will increase net fixed assets (i.e., assets net of depreciation) by $400,000 per year for the next 5 years, and it forecasts that the ratio of revenues to total assets will remain at 1.50. Annual depreciation is 10% of net fixed assets at the beginning of the year. Fixed costs are expected to remain at $96 and variable costs at 80% of revenue. The company’s policy is to pay out two-thirds of net income as dividends and to maintain a book debt ratio of 20% of total capital. INCOME STATEMENT, 2019(Figures in $ thousands) Revenue $ 2,760 Fixed costs 96 Variable costs (80% of revenue) 2,208 Depreciation 160 Interest (8% of beginning-of-year debt) 40 Taxable income 256 Taxes (at 40%) 102 Net income $ 154 Dividends $ 103 Addition to…You have been studying Lucas Corp.’s financial statements. This year, the company has an EBIT of $3.15mil, Depreciation of $295,000, an increase in net working capital of $125,000, and a capital spending of $535,000. You expect that over the next 5 years, EBIT will grow at 15% per year, depreciation and capital spending will grow at 20% per year, and NWC will grow at 10% per year. After year 5, you expect the company’s free cash flow will grow at 3.5% indefinitely. The company has a 21% corporate tax rate and a WACC of 8.9%. a) Compute the free cash flows for the next 5 years. b) Compute the terminal value at the end of year 5. c) What is the company’s enterprise value?The following tables contain financial statements for Dynastatics Corporation. Although the company has not been growing, it now plans to expand and will increase net fixed assets (i.e., assets net of depreciation) by $240,000 per year for the next 5 years, and it forecasts that the ratio of revenues to total assets will remain at 1.50. Annual depreciation is 10% of net fixed assets at the beginning of the year. Fixed costs are expected to remain at $64 and variable costs at 80% of revenue. The company’s policy is to pay out two-thirds of net income as dividends and to maintain a book debt ratio of 20% of total capital. INCOME STATEMENT, 2019(Figures in $ thousands) Revenue $ 1,800 Fixed costs 64 Variable costs (80% of revenue) 1,440 Depreciation 96 Interest (8% of beginning-of-year debt) 24 Taxable income 176 Taxes (at 40%) 70 Net income $ 106 Dividends $ 71 Addition to…