Question

This is a successful tech company. You have estimated the C of E to be 11%...

  • This is a successful tech company. You have estimated the C of E to be 11% and expect share buybacks and dividends to grow 8%/year, and you believe the company could be sold for $2.4 billion at the end of Year 4
    • Fill in Years 2 and 3 of the timeline below and calculate the company’s current market cap and share price given 100 million shares outstanding

Timeline ($ in Millions)

            Year                0          1          2          3          4

            Dividends                    45

            Buybacks                     55

            Div+Buybacks               100

            Mkt Cap                                                                      2,400

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
•T-Co is a successful company. You have estimated the cost of equity  to be11% and expect share...
•T-Co is a successful company. You have estimated the cost of equity  to be11% and expect share buybacks and dividends to grow 8%/year, and you believe the company could be sold for $2.4 billion at the end of Year 4 •Fill in Years 2 and 3 of the timeline below and calculate the company’s current market cap and share price given 100 million shares outstanding Timeline (in millions) Year 0 1 2 3 4 Dividends 45 BuyBacks 55 Div+Buybacks 100 Market...
You are analyzing Superior Corp for Fidelity’s Super Growth ETF and have projected the dividends, share...
You are analyzing Superior Corp for Fidelity’s Super Growth ETF and have projected the dividends, share buy-backs and future market cap for the next 4 years. Dividends/Buybacks are expected to be: $100/$200 (Year 1); $105/$218 (Year 2); $111/$240 (Year 3), and Market Cap $3,600 (Year 4). You have estimated Superior’s Required Return to be 8.5%. What is the estimated current market capitalization for Superior now? Before any calculations, draw a timeline. (Note: $ in Millions.)
1. C&D Corp’s stock is selling for $45/share. You expect dividends to be $.57/share over the...
1. C&D Corp’s stock is selling for $45/share. You expect dividends to be $.57/share over the next year (Year 1), $.63/share in Year 2 and $.69/share in Year 3, and you anticipate the stock will be trading at $65/share at the end of Year 3. Draw a timeline assuming all cash flows occur at the end of each year. If you have estimated C&D Corp’s Cost of Equity to be 7.8%, what do you believe the true value of the...
Enterprise Corp typically pays 80% of its net income in dividends. A. Do you believe Enterprise...
Enterprise Corp typically pays 80% of its net income in dividends. A. Do you believe Enterprise has [many] or [few] good investment opportunities? B. Do you expect its net income to increase at a [fast] or [slow] rate? You expect Sterling Company will pay a dividend of $60 million and repurchase $90 million of its common shares next year (Year 1) with both expected to grow 6% in Year 2 and 7% in Year 3. If you expect the company...
1. You expect Tiger Corp will pay $50 million in dividends and repurchase $80 million of...
1. You expect Tiger Corp will pay $50 million in dividends and repurchase $80 million of its stock over the next 12 months (Year 1). You expect dividends and share repurchases to grow 8% in Year 2 and 7% in Year 3. You also expect Tiger could be bought by a larger competitor at the end of Year 3 for $3.5 billion. If all payments are made at year end, and you have calculated the cost of equity to be...
You expect Tiger Corp will pay $50 million in dividends and repurchase $80 million of its...
You expect Tiger Corp will pay $50 million in dividends and repurchase $80 million of its stock over the next 12 months (Year 1). You expect dividends and share repurchases to grow 8% in Year 2 and 7% in Year 3. You also expect Tiger could be bought by a larger competitor at the end of Year 3 for $3.5 billion. If all payments are made at year end, and you have calculated the cost of equity to be 9.0%,...
You are considering buying a share of stock in the tech company Neutrino, LLC for $250....
You are considering buying a share of stock in the tech company Neutrino, LLC for $250. You expect the stock to pay a dividend of $2 after 3 years and $10 after 4 years, but no dividends in years 1 and 2. You also expect to sell the stock after 4 years for $270. a) If your bank account pays an interest rate of 3 percent, is Neutrino, LLC a good investment? What about if your bank pays an interest...
4. Enterprise Corp typically pays 80% of its net income in dividends. A. Do you believe...
4. Enterprise Corp typically pays 80% of its net income in dividends. A. Do you believe Enterprise has [many] or [few] good investment opportunities? B. Do you expect its net income to increase at a [fast] or [slow] rate? 5. You expect Sterling Company will pay a dividend of $60 million and repurchase $90 million of its common shares next year (Year 1) with both expected to grow 6% in Year 2 and 7% in Year 3. If you expect...
You expect Sterling Company will pay a dividend of $60 million and repurchase $90 million of...
You expect Sterling Company will pay a dividend of $60 million and repurchase $90 million of its common shares next year (Year 1) with both expected to grow 6% in Year 2 and 7% in Year 3. If you expect the company to be sold for $15 billion at the end of Year 3, and you have calculated the cost of equity to be 7.6%, what do you estimate the true value of the company’s net worth to be now?...
You have looked at the current financial statements for Reigle Homes, Co. The company has an...
You have looked at the current financial statements for Reigle Homes, Co. The company has an EBIT of $3,010,000 this year. Depreciation, the increase in net working capital, and capital spending were $233,000, $98,000, and $455,000, respectively. You expect that over the next five years, EBIT will grow at 17 percent per year, depreciation and capital spending will grow at 22 percent per year, and NWC will grow at 12 percent per year. The company has $16,700,000 in debt and...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT