Question

Flyers, Inc., reported an EPS of $5.1 this year (t0). Flyers is expected to maintain a...

Flyers, Inc., reported an EPS of $5.1 this year (t0). Flyers is expected to maintain a retained earnings ratio of 0.3 and ROE of 0.18 for the next four years. After the fourth year, ROE is expected to decrease to 0.06. Applying the cost of equity of 0.15 and the multi-stage growth model, compute the intrinsic price of Flyers. *Round your answer to TWO decimal places.

Business   Finance   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
Flyers, Inc., reported an EPS of $4.6 this year (t0). Flyers is expected to maintain a...
Flyers, Inc., reported an EPS of $4.6 this year (t0). Flyers is expected to maintain a retained earnings ratio of 0.5 and ROE of 0.18 for the next four years. After the fourth year, ROE is expected to decrease to 0.05. Applying the cost of equity of 0.11 and the multi-stage growth model, compute the intrinsic price of Flyers.
Apple Inc. has expected earnings of $6 per share for next year. The company's return on...
Apple Inc. has expected earnings of $6 per share for next year. The company's return on equity ROE is 20% and its earnings retention ratio is 70%. If the company's market capitalization rate is 15%, what is the present value of its growth opportunities if the company's expected P/E ratio is 30?
Last year, Concord Inc. reported total assets of $500, equity of $300, net income of $100,...
Last year, Concord Inc. reported total assets of $500, equity of $300, net income of $100, dividends of $40, and retained earnings in the period of $60. What is Concord Inc.'s growth rate if it maintains a fixed leverage ratio (can issue external debt) but issues no equity?
Abel, Inc., has expected earnings of $3 per share for next year. The firm's ROE is...
Abel, Inc., has expected earnings of $3 per share for next year. The firm's ROE is 20%, and its earnings retention ratio is 50%. If the firm's market required rate on the stock is 15%, what is the present value of its growth opportunities? A. Less than $12 B. Higher than $12 but less than $15 C. Higher than $18 but less than $20 D. Higher than $22
Dividends discount model: The MBS Corporation’s dividends per share are expected to grow indefinitely by 5%...
Dividends discount model: The MBS Corporation’s dividends per share are expected to grow indefinitely by 5% per year. DDa.       If this year-end dividend is $8 and the market capitalization rate is 10% per year, what must the current stock price be according to the DDM (Dividends Discounting Model)? DDb.      If the expected earnings per share are 12$, what is the implied value of the ROE on future investment opportunities? DDc.       How much is the market paying per share for growth opportunities (i.e., for...
Benchmark Metrics Inc.​ (BMI), an​ all-equity financed​ firm, reported EPS of $ 5.81 in 2013. Despite...
Benchmark Metrics Inc.​ (BMI), an​ all-equity financed​ firm, reported EPS of $ 5.81 in 2013. Despite the economic​ downturn, BMI is confident regarding its current investment opportunities. But due to the financial​ crisis, BMI does not wish to fund these investments externally. The Board has therefore decided to suspend its stock repurchase plan and cut its dividend to $ 1.43 per share​ (vs. almost $ 2 per share in​ 2012), and retain these funds instead. The firm has just paid...
Cold Duck Manufacturing Inc. reported sales of $775,000 at the end of last year, but this...
Cold Duck Manufacturing Inc. reported sales of $775,000 at the end of last year, but this year, sales are expected to grow by 9%. Cold Duck expects to maintain its current profit margin of 20% and dividend payout ratio of 30%. The following information was taken from Cold Duck’s balance sheet: Total assets: $475,000 Accounts payable: $65,000 Notes payable: $40,000 Accrued liabilities: $65,000 Based on the AFN equation, the firm’s AFN for the current year is _______ . A positively...
Green Caterpillar Garden Supplies Inc. reported sales of $775,000 at the end of last year; but...
Green Caterpillar Garden Supplies Inc. reported sales of $775,000 at the end of last year; but this year, sales are expected to grow by 7%. Green Caterpillar expects to maintain its current profit margin of 20% and dividend payout ratio of 10%. The firm’s total assets equaled $400,000 and were operated at full capacity. Green Caterpillar’s balance sheet shows the following current liabilities: accounts payable of $70,000, notes payable of $30,000, and accrued liabilities of $70,000. Based on the AFN...
More on the AFN (Additional Funds Needed) equation Green Caterpillar Garden Supplies Inc. reported sales of...
More on the AFN (Additional Funds Needed) equation Green Caterpillar Garden Supplies Inc. reported sales of $743,000 at the end of last year; but this year, sales are expected to grow by 7%. Green Caterpillar expects to maintain its current profit margin of 23% and dividend payout ratio of 15%. The firm’s total assets equaled $400,000 and were operated at full capacity. Green Caterpillar’s balance sheet shows the following current liabilities: accounts payable of $70,000, notes payable of $40,000, and...
More on the AFN (Additional Funds Needed) equation Green Caterpillar Garden Supplies Inc. reported sales of...
More on the AFN (Additional Funds Needed) equation Green Caterpillar Garden Supplies Inc. reported sales of $775,000 at the end of last year; but this year, sales are expected to grow by 6%. Green Caterpillarexpects to maintain its current profit margin of 20% and dividend payout ratio of 30%. The firm’s total assets equaled $475,000 and were operated at full capacity. Green Caterpillar’s balance sheet shows the following current liabilities: accounts payable of $60,000, notes payable of $25,000, and accrued...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT