Questions 1. According to ValueLine estimates in Figure 1, James River’s expected annual dividend growth rate from the 91–93 to 97–99 period is 5.50%, and the next dividend (1995) is expected to be $0.60. Assume that the required return for James River was 8.36% on January 1 1995 and that the 5.50% growth rate was expected to continue indefinitely. a. Based on the Constant Growth Rate or Gordon Model, what was James River’s price at the beginning of 1995?
Questions 1. According to ValueLine estimates in Figure 1, James River’s expected an¬nu¬al dividend growth rate from the 91–93 to 97–99 period is 5.50%, and the next dividend (1995) is expected to be $0.60. Assume that the re¬quired return for James River was 8.36% on January 1 1995 and that the 5.50% growth rate was expected to continue indefinitely. a. Based on the Constant Growth Rate or Gordon Model, what was James River’s price at the beginning of 1995?
Finance 439 Christie Sheats Guidelines for Beatrice Peabody 1. According to Value line estimates in Figure 1, James River expected annual dividend growth rate from the 91-93 to 97-99 period is 5.5% and the next dividend (1995) is expected to be 0.60c. Assume that the required rate of return for James River was 8.36% on January 1st 1995 and that the 5.50% growth rate was expected to continue indefinitely. Based on the constant growth rate model, what was James River price at the beginning of 1995? James River’s Price was $20.98 at the beginning of 1995.
Expected Return The Buckle (BKE) recently paid a $0.90 dividend. The dividend is expected to grow at a 19 percent rate. At the current stock price of $43.17, what is the return shareholders are expecting? C. 21.48% i = D1/P0 + g = D0(1 + g)/P0 + g = .90(1+.19)/43.17 + .19 = .2148 8. This is the interest rate that would exist on a default free security if no inflation were expected.
2.0 points) I would prefer a savings account that offered compound interest. As time passes, even if no deposits are made to the account the amount sitting in there can just keep gaining more and more interest. It does so at a faster rate than an account offered with simple interest so this seems much more appealing. 4. If you were opening a savings account with compound interest, would you prefer an account that offers annual compounding, quarterly compounding, or daily compounding?
• internal rate of growth. • average historical rate of growth. • rate of return on equity. • sustainable rate of growth. Find The Complete Answers just a click away FIN 571 Week 3 Connect Problems - Assignment 6.
d) The equilibrium interest rate increases to bring desired investment into equilibrium with the reduced quantity of national saving. e) The equilibrium quantity of investment is reduced via the increase in the interest rate by an amount equal to the increase in government spending. Question 5 (15 marks) a) capital is added. No, MPK does not diminish because it does not decline as more is also acceptable. b) L = 100: L = 110: L = 120: 0. .
2.0 points) I would rather have a savings account that offered compound interest. I would choose compound interest because it speeds up the process of building up interest. Simple interest slowly grows, while compound interest is fast. 4. If you were opening a savings account with compound interest, would you prefer an account that offers annual compounding, quarterly compounding, or daily compounding?
Which financial statement reports the amounts of cash that the firm generated and distributed during a particular time period? statement of retained earnings Income statement Statement of cash flows Balance sheet We commonly measure the risk-return relationship using which of the following? Expected returns Coefficient of variation Correlation coefficient Standard deviation What's the current yield of a 6 percent coupon corporate bond quoted at a price of 101.70? 6.1 percent 10.2 percent 6.0 percent 5.9 percent Which financial statement reports a firm's assets, liabilities, and equity at a particular point in time? Statement of cash flows Balance sheet Statement of retained earnings Income statement As new capital budgeting projects arise, we must estimate__________.
Case Study Tottenham Hotspur Question 1 a] DCF Analysis A discounted cash flow analysis is a method of valuing a project, company or asset using the concepts of the time value of money. All future cash flows are estimated and discounted with an appropriate discount rate, to give their present values (PV’s). The sum of all future cash flows, both incoming and outgoing, is the net present value (NPV), which is taken as the value or price of the cash flows in question. To perform a DCF analysis we have made a set of assumptions. The assumptions are listed below: Capital expenditure is £3.3m in 2007 and grows and 4% per year after 2009 Depreciation is £2.2m and grows at 4% per year after 2009 Risk free rate (rf) is 4.57% Tottenham’s equity beta is 1.29 The tax rate is 35% The market premium is 4% (based on a mature market, as shown in the slides) Tottenham’s debt rate 5.25%% [2.26/43.08] We assume the default rate of Tottenham is 0 (zero) The company’s long term growth rate is 4% The cost of equity (Re) is 9.73% (4.57% + 1.29 * 4%) The cost of debt is 3.41% [5.25% * (1 - 0.35)] The appropriate WACC is 8.14% [9.73% * (128.2/(128.2 + 43.08)) + 3.41 * (43.08/(128.2 + 43.08))] We assumed the items property plant equipment, intangible assets, accounts receivable, inventory, investments and cash as a percentage of revenues.