Writer did an excellent job on completing the discussion board assignment questions in a timely manner and the revising. I will be hiring this writer for future assignments.
4) Company HTA had a free cash flow for the firm (FCFF) of $1,500,000 last year. It is expected the FCFF will keep a sustainable growth rate of 5%. The company has 2 million common shares outstanding. In addition, the following information has been gathered: Capital structure: D/E=0.2:0.8, Market value of Debt: VD =$5,000,000; Required return on equity: kE =15% Cost of debt before tax =6%, Tax rate: tc =25%; Determine the fair value of HTA stock.
5) Company JUK has a ROE of 25% and the company will not pay any dividend for the next 3 years. It is estimated that the company will pay $2 dividend per share after three years and then to level off to 5% per year forever.
The company has a beta of 2. Assume the risk-free interest rate is 4%, and the market risk premium is 8%.
1. What is your estimate of the fair price of a share of the stock?
2. If the market price of a share is equal to this intrinsic value, what is the P/E ratio?
3. What do you expect its price to be 1 year from now? Is the implied capital gain consistent with your estimate of the dividend yield and the market capitalization rate?
6.MicroSense, Inc., paid $2 dividends per share last year. It is estimated that the company’s ROEs will be 12% and 10%, respectively, next two years. The plowback rate in next two years will be 0.6. It is expected that the dividends will grow at a sustainable rate of 3% per year after two years. Assume that the expected return on the market is 8%, the risk-free rate is 4%, and the beta of the stock is 1.4. What is the fair price of the stock?
7. An analyst uses the constant growth model to evaluate a company with the following data for a company:
Leverage ratio (asset/equity): 1.8
Total asset turnover: 1.5
Current ratio: 1.8
Net profit margin: 8%
Dividend payout ratio: 40%
Earnings per share in the past year: $0.85
The required rate on equity: 15%
Based on an analysis, the growth rate of the company will drop by 25 percent per year in the next two years and then keep it afterward. Assume that the company will keep its dividend policy unchanged.
1. Determine the growth rate of the company for each of next three years.
2. Use the multi-period DDM to estimate the intrinsic value of the company’s stock.
3. Suppose after one year, everything else will be unchanged but the required rate on equity will decrease to 14%. What would be your holding period return for the year?
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.Read more
Each paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.Read more
Thanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.Read more
Your email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.Read more
By sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.Read more