Question

Assuming Sunland Corp. has an ROE of 10% and investors require a
9% return on shares, estimate the firm’s P/E ratio and market price
given an EPS of $2.00 and a 20% payout ratio. *(Round
answers to 2 decimal places, e.g. 5.25.)*

Answer #1

Calculations-

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The market consensus is that Analog Electronic Corporation has
an ROE of 9% and a beta of 1.25. It plans to maintain indefinitely
its traditional plowback ratio of 2/3. This year's earnings were $3
per share. The annual dividend was just paid. The consensus
estimate of the coming year's market return is 14%, and T-bills
currently offer a 6% return.
Calculate the P/E ratio. (LEADING AND TRAILING)
(Do not round intermediate calculations. Round your answers
to 2 decimal places.)
P/E...

1) Beta Corp. has a market capitalization rate of 12%, an ROE of
10% and a plowback ratio of 80%. Suppose Beta. Corp decides to pay
out 100% of its earnings. What will happen to its P/E ratio?
2) Alpha Corp. has a market capitalization rate of 12%, an ROE
of 16% and a plowback ratio of 50%. Suppose Alpha Corp. decides to
pay out 100% of its earnings. What will happen to its P/E
ratio?

Company Q’s current return on equity (ROE) is 13%. The firm pays
out 45 percent of its earnings as cash dividends. (payout ratio =
.45). Current book value per share is $53. Book value per share
will grow as Q reinvests earnings.
Assume that the ROE and payout ratio stay constant for the next
four years. After that, competition forces ROE down to 11.0% and
the payout ratio increases to .70. The cost of capital is
11.0%.
a. What are...

Company Q’s current return on equity (ROE) is 16%. The firm pays
out 60 percent of its earnings as cash dividends. (payout ratio =
.60). Current book value per share is $62. Book value per share
will grow as Q reinvests earnings.
Assume that the ROE and payout ratio stay constant for the next
four years. After that, competition forces ROE down to 12.5% and
the payout ratio increases to .80. The cost of capital is
12.5%.
a. What are...

Investors require a 10% aftertax return for investing in shares.
The dividends are taxed at 28% and capital gains are not taxed at
all. The expected value for the shares of Omega in one year is $20
and the expected dividend is $2.
a- Determine the present value of this share.
b- Consider the case in which Omega pays out a $3 cash dividend
per share. If the expected return after tax is still 10% and
investors are waiting to...

An all-equity firm has 100,000 shares of common stock
outstanding. Investors require a 25% return on the firm’s equity.
The firm is expected to live for one year. Its end-of-year cash
flows can be $1M, $2M, $3M, $4M, and $5M with equal probabilities.
There are no corporate or personal taxes, and no bankruptcy
costs.
a) What is the value of the firm
b) Suppose the firm issues debt with face value of $1M maturing
in a year with no coupons,...

2) A company that you are interested in has an ROE of 20%. Its
dividend payout ratio is 60%. The last dividend, that was just
paid, was $2.00 and the dividends are expected to grow at the same
current rate indefinitely. Company's stock has a beta of 1.8,
risk-free rate is 5%, and the market risk premium is 10%. a)
Calculate the expected growth rate of dividends using the ROE and
the retention ratio. b) Calculate investors' required rate of...

IBM has ROE =9% and a beta if 1.25. It plans to maintain
indefinitely its traditional plowback ratio. This year’s earnings
were $3 per share. The annual dividend was just paid. The consensus
estimate of the coming year’s market return is 14% and T-bill
currently offers a 6% return. The leading P/E is 3.33 and the stock
is sold at $10.60. What is the traditional plowback ratio

MF Corp. has an ROE of 18% and a plowback ratio of 50%. The
market capitalization rate is 12%.
a. If the coming year’s earnings are expected
to be $2.60 per share, at what price will the stock sell?
(Do not round intermediate calculations. Round your answer
to 2 decimal places.)
b. What price do you expect MF shares to sell
for in two years? (Do not round intermediate calculations.
Round your answer to 2 decimal places.)

PLEASE ANSWER!! NEED DONE QUICKLY!!! I WILL RATE AND RESPOND!
The Jeter Corporation is considering acquiring the A-Rod
Corporation. The data for the two companies are as follows:
A-Rod Corp.
Jeter Corp.
Total earnings
$
660,000
$
3,500,000
Number of shares of stock outstanding
275,000
1,750,000
Earnings per share
$
2.40
$
2.00
Price-earnings ratio (P/E)
15
18
Market price per share
$
36
$
36
a. The Jeter Corp. is going to give A-Rod Corp.
a 50 percent...

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