Question

A company had $22 of sales per share for the year that just ended. You expect...

A company had $22 of sales per share for the year that just ended. You expect the company to grow their sales at 6 percent for the next five years. After that, you expect the company to grow 3.5 percent in perpetuity. The company has a 14 percent ROE and you expect that to continue forever. The company's net margins are 6 percent and the cost of equity is 10 percent. Use the free cash flow to equity model to value this stock. Do not round intermediate calculations. Round your answer to the nearest cent.

Homework Answers

Answer #1

ANSWER IN THE IMAGE. FEEL FREE TO ASK ANY DOUBTS. THUMBS UP PLEASE.

Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
A company had $22 of sales per share for the year that just ended. You expect...
A company had $22 of sales per share for the year that just ended. You expect the company to grow their sales at 7 percent for the next five years. After that, you expect the company to grow 4.5 percent in perpetuity. The company has a 12 percent ROE and you expect that to continue forever. The company's net margins are 5 percent and the cost of equity is 11 percent. Use the free cash flow to equity model to...
A company had $17 of sales per share for the year that just ended. You expect...
A company had $17 of sales per share for the year that just ended. You expect the company to grow their sales at 5.75 percent for the next five years. After that, you expect the company to grow 3.25 percent in perpetuity. The company has a 15 percent ROE and you expect that to continue forever. The company's net margins are 6 percent and the cost of equity is 11 percent. Use the free cash flow to equity model to...
A company had $20 of sales per share for the year that just ended. You expect...
A company had $20 of sales per share for the year that just ended. You expect the company to grow their sales at 6.25 percent for the next five years. After that, you expect the company to grow 3.75 percent in perpetuity. The company has a 15 percent ROE and you expect that to continue forever. The company's net margins are 5 percent and the cost of equity is 10 percent. Use the free cash flow to equity model to...
You are valuing a bank. The bank currently has assets of $335 per share. Five years...
You are valuing a bank. The bank currently has assets of $335 per share. Five years from now (that is, at the end of five years), you expect their assets per share to be $480. After Year 5, you expect their assets per share to grow at 3.75 percent per year forever. The bank has an ROA of 1.6 percent and an ROE of 13.0 percent. The bank's cost of equity is 12.0 percent. What is the value of the...
The current risk-free rate is 4 percent and the market risk premium is 5 percent. You...
The current risk-free rate is 4 percent and the market risk premium is 5 percent. You are trying to value ABC company and it has an equity beta of 0.9. The company earned $3.50 per share in the year that just ended. You expect the company's earnings to grow 4 percent per year. The company has an ROE of 11 percent. What is the value of the stock? Do not round intermediate calculations. Round your answer to the nearest cent....
The current risk-free rate is 3 percent and the market risk premium is 5 percent. You...
The current risk-free rate is 3 percent and the market risk premium is 5 percent. You are trying to value ABC company and it has an equity beta of 0.7. The company earned $2.00 per share in the year that just ended. You expect the company's earnings to grow 3 percent per year. The company has an ROE of 13 percent. What is the value of the stock? Do not round intermediate calculations. Round your answer to the nearest cent....
The current risk-free rate is 2 percent and the market risk premium is 3 percent. You...
The current risk-free rate is 2 percent and the market risk premium is 3 percent. You are trying to value ABC company and it has an equity beta of 0.7. The company earned $3.50 per share in the year that just ended. You expect the company's earnings to grow 2 percent per year. The company has an ROE of 12 percent. What is the value of the stock? Do not round intermediate calculations. Round your answer to the nearest cent....
a. You just purchased a share of SPCC for ​$100. You expect to receive a dividend...
a. You just purchased a share of SPCC for ​$100. You expect to receive a dividend of ​$5 in one year. If you expect the price after the dividend is paid to be ​$110​, what toal return will you have earned over the​ year? What was your dividend​ yield? Your capital gain​ rate? The total return you will have earned over the year is _____%. (Round to two decimal places) b. NoGrowth Corporation currently pays a dividend of $0.42 per​...
A company currently pays a dividend of $3.5 per share (D0 = $3.5). It is estimated...
A company currently pays a dividend of $3.5 per share (D0 = $3.5). It is estimated that the company's dividend will grow at a rate of 22% per year for the next 2 years, then at a constant rate of 5% thereafter. The company's stock has a beta of 1.9, the risk-free rate is 7.5%, and the market risk premium is 6%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to...
The Clipper Sailboat Company is expected to earn $4 per share next year. The company will...
The Clipper Sailboat Company is expected to earn $4 per share next year. The company will have a return on equity of 17 percent and the company will grow 5 percent in the future. The company has a cost of equity of 15 percent. Given that information, answer the following questions. What is the value of the company's stock? Do not round intermediate calculations. Round your answer to the nearest cent. $   What is the present value of the growth...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT