You have looked at the current financial statements for Reigle Homes, Co. 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? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
Q: Princess Cruise Company (PCC) purchased a ship from Mitsubishi Heavy Industry for 720 million yen…
A: A company has the option to use forward contracts to hedge its currency exposure or the money…
Q: You have been hired as consultants to research, report and present to a senior management team…
A: Aubree's decision to strategically provide loan programmes specifically designed for Small and…
Q: A 27-year bond, with a price equal to 75% of its face value, offers annual coupons with the coupon…
A: The objective of the question is to find the maturity of a zero-coupon bond that has the same price,…
Q: Mexican Motors' market cap is 200 billion pesos. Next year's free cash flow is 9.7 billion pesos.…
A: The question is based on the concept of valuing a company using the Gordon Growth Model, also known…
Q: a. Many years ago, Castles in the Sand Incorporated issued bonds at face value at a yield to…
A: The bond price is the cost of a bond. It is the cost of purchasing that assurance from another…
Q: Item Prior year Current year Accounts payable 8,182.00 7,768.00 Accounts receivable 6,011.00…
A: Begin by calculating the total liabilities and equity of the firm. Then, determine the cash amount…
Q: Use the commission schedule from Company A shown in the table to find the annual rate of interest…
A: The rate of return on the stock refers to the annual profits provided by the stock to the investors.…
Q: Suppose that 6 - month, 12-month, 18 - month, 24 month, and 30 - month zero rates are 4%, 4.2%,…
A: The objective of the question is to calculate the cash price of a bond given the zero rates for…
Q: Do not use chat gpt Your firm is contemplating the purchase of a new $590,000 computer - based order…
A: We can find the Internal Rate of Return for this project by finding parameter given below:the…
Q: Your broker offers to sell you some shares of Bahnsen & Co. common stock that paid a dividend of…
A: Here,Dividend at time 0 is $2Expected growth rate is 8% Time period is 3 years Discount Rate is 9%
Q: Required information [The following information applies to the questions displayed below.] A pension…
A: Expected return of stock fund (S)17%Expected return of bond fund (B)11%Risk-free rate…
Q: An investor can design a risky portfolio based on two stocks, A and B. Stock A has an expected…
A: Standard deviation is commonly used as a gauge for risk or volatility, with higher values suggesting…
Q: The following spot rates are available for periods 1 through 5, respectively; 1%, 2%, 3%, 4% and 5%.…
A: The objective of the question is to calculate the price of a bond given its coupon rate and the spot…
Q: Use the following select financial information to prepare a December 31 income statement. Cash $…
A: An income statement is a type of financial statement that displays the earnings and outlays for a…
Q: Ayden's Toys, Incorporated, just purchased a $525,000 machine to produce toy cars. The machine will…
A: Financial break-even point refers to that point at which total revenue becomes equal to that of…
Q: Baghiben
A: The objective of the question is to restate the given net cash flows in real terms and then discount…
Q: After successfully completing your corporate finance class, you feel the next challenge ahead is to…
A: 1) In the case of straight voting, one member is elected at a time. So to win by majority we need to…
Q: The Ali plan to retire and start receiving their Social Security benefits at the same time, when…
A: Monthly withdrawals refer to the regular disbursement of funds from an individual's investment or…
Q: The following table shows the nominal returns on Brazilian stocks and the rate of inflation. Year…
A: YearNominal returnInflation…
Q: i need the answer quickly
A: Net Present Value (NPV) is an essential tool in capital budgeting and investment decision-making. It…
Q: The current price of Parador Industries stock is $67 per share. Current sales per share are $18.75,…
A: Price per share ratio refers to the value of earnings in respect of the one share of the company…
Q: Consider a project in which you have to invest $15,000 today and you will receive $24847 in one…
A: Future Value = $24,847Present Value = $15,000Number of years (n) = 1We need to calculate the…
Q: Explain a cash flow statement?
A: The objective of this question is to understand what a cash flow statement is and its importance in…
Q: Crane Company is considering buying a new farm that it plans to operate for 10 years. The farm will…
A: Capital budgeting refers to the procedure that the company undergoes when it needs to invest in the…
Q: You are the financial analyst for a tennis racket manufacturer. The company is considering using a…
A: NPV stands for Net Present Value. It is a financial metric used to evaluate an investment or project…
Q: Q2 (Exercise 9.9) Suppose call and put prices are given by Strike 50 55 Call premium 16 10 Put…
A: Put-call parity is a fundamental principle in options pricing theory that establishes a relationship…
Q: (Appendix 13A and 13B) A company anticipates a tax-deductible cash expense of $40,000 in year 2 of a…
A: The present value of a cash outflow is the current worth of a future sum of money that is to be paid…
Q: - If P10,000 becomes P18,113.60 after 5 years when invested at unknown rate of interest compounded…
A: The time value of money is a concept in finance that uses the compounding effect to evaluate the…
Q: Assume that you are considering the purchase of a 20-year, noncallable bond with an annual coupon…
A: Investment interest rates reflect the return earned on invested capital. This return can be a fixed…
Q: Light Sweet Petroleum, Inc., is trying to evaluate a generation project with the following cash…
A: Capital budgeting is a process of analyzing, evaluating, and allocating resources in the various…
Q: A loan of $34,200.00 at 5.50% compounded semi-annually is to be repaid with payments at the end of…
A: The objective of the question is to calculate the size of the periodic payment and the total…
Q: Required information [The following information applies to the questions displayed below.) A pension…
A: Stock Fund SBond Fund BExpected return17%11%Standard Deviation38%29%Risk free…
Q: Do not use chatgpt.
A: Profitability Index = Present Value of Cash Flows / Initial Investment project 1:Calculate the…
Q: On January 1, 2024, Avalanche Corporation borrowed $104,000 from First Bank by Issuing a two-year,…
A: The net effect on earnings refers to the overall impact or result of various factors on a company's…
Q: A firm offers terms 3/15, net/60. Calculate the Annual Percentag Annual Percentage Rate (APY) is for…
A: APR stands for annual percentage rate, which is regarded as the nominal rate, and EAR stands for an…
Q: A company is projected to generate free cash flows of $457 million next year, growing at a 4.4% rate…
A: To begin, calculate the value of the firm using the discounted cash flow (DCF) approach, a common…
Q: A garage is installing a new "bubble-wash' car wash, which requires an initial investment of…
A: Net Present Value (NPV) is a capital budgeting technique that assesses the profitability of an…
Q: You bought a newly issued 10-year, $1,000 par value, 5.50% coupon bond (with semiannual coupon…
A: Bond yield is the percentage of return that is expected by an investor from the bond. The capital…
Q: 1. (20%) FIN307 stock has the following probability distribution of expected prices one year from…
A: The objective of the question is to find out the price an investor is willing to pay today for a…
Q: Red, Incorporated, Yellow Corporation, and Blue Company each will pay a dividend of $1.50 next year.…
A: As the growth rate is constant and lower than the required return, we can apply the constant…
Q: Stereo Inc. sells a stereo system for $100 down and monthly payments of $30 for the next 5 years. If…
A: Cost of system is the present value of monthly payments based on time value of money and plus down…
Q: You work for a pharmaceutical company that has developed a new drug. The patent on the drug will…
A: The Present Value of a Growing Annuity refers to an annuity in which the amount increases after each…
Q: Consider two mutually exclusive projects A and B: Project Cash Flows (dollars) NPV at 12% CO C 0 C1…
A: Project AProject BC0-$35,500-$55,500C1$25,400$38,500C2$25,400$38,500NPV@12%$7,427$9,567
Q: Problem 12-7 (Algo) [LU 12-2 (2)] Complete the following using present value. (Use the Table 12.3…
A: PV can be referred to as the current worth of the expected future amount that is desired to be…
Q: Depreciation BIT 2020 83,492 493,294 2021 38,592 483,195 2022 37,502 293,602 2023 28,957 936,823…
A: Free cash flow is cash flow available from business operations after taking into account…
Q: Ted, Will, Mike, and Tom own a 20-room home as tenants in common. Mike and Tom, two of the owners,…
A: The question is asking whether Mike and Tom, who are part of a tenancy in common, can legally sell…
Q: Calculate the return on equity (ROE) for a company with a net income of $50,000, total equity of…
A: A company's Return on Equity (ROE) reveals its profitability by demonstrating the profit it earns on…
Q: The standard deviation of annual returns for Stock #1 is 53% and for Stock #2 is 47%. The…
A: Buying and short selling stock:Buying and short selling stocks are two contrasting strategies in the…
Q: The federal government is considering an investment that would cost $25 billion in construction…
A: Initial Investment = $25 billion or $25,000,000,000Annual Saving (P) = $2 billion or…
Q: The expected return of Flint is 19.0 percent, and the expected return of Buffalo is 24.0 percent.…
A: Portfolio:A portfolio is considered as the collection of financial investments like stocks,…
Step by step
Solved in 3 steps with 2 images
- Towson Industries is considering an investment of $256,950 that is expected to generate returns of $90,000 per year for each of the next four years. What Is the Investments internal rate of return?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 ASAPYou 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 $3,850,000 this year. Depreciation, the increase in net working capital, and capital spending were $275,000, $133,000, and $525,000, respectively. You expect that over the next five years, EBIT will grow at 20 percent per year, depreciation and capital spending will grow at 10 per year, and NWC will grow at 15 per year. The company has $22,500,000 in debt and 430,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.3 percent, indefinitely. The company's WACC is 9.35 percent and the tax rate is 21 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 S 226.59You have looked at the current financial statements for J&R Homes, Company. The company has an EBIT of $5,250,000 this year. Depreciation, the increase in net working capital, and capital spending were $345,000, $175,000, and $595,000, 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 $29,500,000 in debt and 500,000 shares outstanding. After Year 5, the adjusted cash flow from assets is expected to grow at 3.3 percent, indefinitely. The company's WACC is 9.45 percent and the tax rate is 25 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 priceYou 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?
- You 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 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 Prentice Paint Company earned a Net Profit margin of 20% on revenues of $20million this year. Fixed Capital Investment was $2 million and the depreciation was $3 million. Working capital investment equals 7.5% of the sales level in that year. Net Income, Fixed Capital Investment, depreciation, interest expense, and sales are expected are expected to grow at 10% per year for the next 5 years. After 5 years, the growth rate in sales, net income, and interest expense will decline to a stable 5% per year, and fixed capital investment and depreciation will offset each other. The tax rate is 40%, it has 1 million shares of common stock outstanding, and has long-term debt paying 12.5% interest trading at its par value of $32 million. Calculate the value of the firm and its equity using the FCFF model if the WACC is 17% during the high growth stage and 15% during the stable stage.
- Hernandez Corporation expects to have the following data during the coming year. What is Hernandez's expected ROE? (Show your work) Assets = $200,000 D/A = 65% EBIT = $25,000 Interest rate = 8% Tax rate = 40%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 $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 60 Variable costs (80% of revenue) 1,440 Depreciation 80 Interest (8% of beginning-of-year debt) 24 Taxable income 196 Taxes (at 40%) 78 Net income $ 118 Dividends $ 79 Addition to…