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ASHA 777 [7]
2 years ago
11

The XYZ Corporation pays no cash dividends currently and is not expected to for the next five years. Its latest EPS was $18.00,

all of which was reinvested in the company. The firm’s expected ROE for the next five years is 16% per year, and during this time it is expected to continue to reinvest all of its earnings. Starting in year 6, the firm’s ROE on new investments is expected to fall to 11%, and the company is expected to start paying out 30% of its earnings in cash dividends, which it will continue to do forever after. DEQS’s market capitalization rate is 24% per year. a. What is your estimate of XYZ’s intrinsic value per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Business
1 answer:
stellarik [79]2 years ago
4 0

Answer:

current intrinsic value per stock = $26.35

Explanation:

year                      dividend              EPS

0                              0                       $18

1                               0                       $20.88

2                              0                       $24.22

3                              0                       $28.10

4                              0                       $32.59

5                              0                       $37.81

6                              $12.59              $41.97

growth rate up to year 5 = 16%

ROE growth rate starting year 6 = 11%

dividend growth rate starting year 6 = 11% x (1 - 30%) = 7.7%

cost of equity = 24%

horizon value at year 5 = $12.59 / (24% - 7.7%) = $77.24

current intrinsic value per stock = $77.24 / 1.24%⁵ = $26.35

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Using the tables above, what would be the present value of $15,000 to be received at the end of each of the next 2 years, assumi
LUCKY_DIMON [66]
The answer to this question is: D. 30,000
7 0
3 years ago
Thomas Kratzer is the purchasing manager for the headquarters of a large insurance company chain with a central inventory operat
11111nata11111 [884]

Answer:

199.02 units

Explanation:

The computation of the economic order quantity is shown below:

Data provided in the question

Annual demand per year = 5,750 units

The Cost of each units = $96

The inventory carrying cost per unit per year = $9

The average ordering cost per order = $31

So, economic order quantity is

= \sqrt{\frac{2\times \text{Annual demand}\times \text{Ordering cost}}{\text{Carrying cost}}}

= \sqrt{\frac{2\times \text{5,750}\times \text{\$31}}{\text{\$9}}}

= 199.02 units

Hence, the economic order quantity is 199.02 units

3 0
2 years ago
The supply function for good X is given by Qxs = 1,000 + PX - 5PY - 2PW, where PX is the price of X, PY is the price of good Y,
marin [14]

Answer:

will decrease by 40 units.

Explanation:

In supply function for good X the Price of W is Doubled. So any changein the price will increase the PW by double amount. The two times of price of good Y is subtracting from the supply function and price of the W will ultimately decrease the quantity demanded by double effect of each one dollar increase in it. So the supply of good X  will decrease by 40 units.

5 0
3 years ago
Please examine the following short paragraph on a hypothetical paper about cybersecurity and the Internet of Things. The writer
Basile [38]

Answer:

The errors are:

1. When the author is quoted in a sentence, his name is not in brackets, only the year of his book.  For example, the write-up should have read like this: "Shindell (2008) argues that hackers increasingly integrate ..."  This is a more appropriate way of citing an author.  However, the writer could do well to show the exact words of Shindell with quotation marks to differentiate from his or her words.

2. Two sentences were put in quotation marks without any indication of the author(s) to which the words were attributed.  Since they look like direct quotes from Shindell, the write-up should read like this: Shindell (2008) said, "during an attack, victims ..."  And the second quoted sentence should read like this: "... were hit with ransomware in the previous 12 months," according to Shindell (2008).

Explanation:

Referencing somebody else's intellectual property helps to avoid plagiarism, which is considered as a very serious crime.

3 0
3 years ago
Last week, Seward Company stock was selling at $66 a share when Ryan sold 300 shares of the stock short. Today Ryan bought 300 s
xenn [34]

Answer:

The answer is: Ryan lost $1,200 dollars

Explanation:

Ryan sold short 300 shares of the stock when it was at $66. This means, he borrowed 300 shares from the broker with the obligation of buying them back later. When you sell short, you want the stock price to go down to make money, because when you buy them back you are buying at a lower price than what you sold them for, and the price difference times the number of shares is your gain.

In this case, the price went up to $70 and he decided to buy them back before the stock went higher up and he lost more money. Since he sold short at $66 and bought back at $70, it means he lost $70-$66=$4 per share. Multiply this by the amount of shares in the transaction $4x300=$1200. And that is the dollar return on his investment which is negative in this case.

5 0
3 years ago
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