A firm requires an investment of $18,000 and will return $25,000 after one year. If the firmborrows $10,000 at 6%, what is the return on levered equity?

Castles in the Sand generates a rate of return of 20% on its investments and maintains a plowback ratio of 0.20. Its earnings this year will be $2 per share. Investors expect a rate of return of 10% on the stock. a. Find the price and P/E ratio of the firm. b. Find the price and P/E ratio of the firm if the plowback ratio is reduced to 0.10.

Castle-in-Sand generates a rate of return of 20% on its investments and maintains a plowback ratio of 0.30. Its earnings this year will be $4 per share. Investors expect a 12% rate of return on the stock.   Required: (a.)       Find the price and P/E ratio of the firm. (b.)       What happens to the P/E ratio if the plowback ratio is reduced to 0.20? Why? (c.)       Show that if plowback equals zero, the earnings-price ratio, E/P, falls to the expected rate of return on the stock.

Consider a two-date binomial model. A company has both debt and equity in its capital structure. The value of the company is 100 at Date 0. At Date 1, it is equally like that the value of the company increases by 20% or decreases by 10%. The total promised amount to the debtholders is 100 at Date 1. The riskfree interest rate is 10%. a. What are the possible payoffs to the equityholders at date 1? What kind of financial product has the same payoffs? Please describe the detailed characteristics of the financial product. b. What are the possible payoffs to the bondholders at date 1? Are they riskfree? What kind of financial product/portfolio has the same payoffs? Please describe the detailed characteristics of the financial product/portfolio.

Suppose TB Pirates, Inc. is expected to pay a $2dividend in one year. If the dividend is expected togrow at 5% per year and the required return is 20%,what is the price?

Suppose the interest rate is 12 percent and the firm is expected to grow at a rate of 7 percent for the foreseeable future. The firm's current profits are P50 million. What is the value of the firm (the present value of its current and future. earnings)?

What is the internal rate of return (IRR) of an investment that requires an initial investmen of $11,000 today and pays $15,400 in one year's time?

A company projects a rate of return of 20% on new projects. Management plans to plow back 20% of all earnings into the firm. Earnings this year will be $6 per share, and investors expect a rate of return of 12% on stocks facing the same risks as the company.a) What is the sustainable growth rate?b) What is the stock price?c) What is the present value of growth opportunities (PVGO)?d) What is the P/E ratio?e) What would the price and P/E ratio be if the firm paid out all earnings as dividends?

A company projects a rate of return of 20% on new projects. Management plans to plow back 20% of all earnings into the firm. Earnings this year will be $6 per share, and investors expect a rate of return of 12% on stocks facing the same risks as this company. What is the sustainable growth rate? What is the stock price? What is the present value of growth opportunities (PVGO)? What is the P/E ratio? What would the price and P/E ratio be if the firm paid out all earnings as dividends? Please show workings with formulas.

If a VC says, “we are looking for 10X return in 3 years”. Suppose VC’s cost of capital is 10%.  What is the implied probability of success?   Group of answer choices 11.2% 13.5% 13.3% 17.2%