HomeworkLib
Question

Sisters Corp. expects to earn $6 per share next year. The firms ROE is 15% and its plowback ratio is 60%. The firms market

business   finance   
2 0
Add a comment Improve this question Transcribed image text
Next > < Previous
Sort answers by oldest

Homework Answers

Answer #1

1.
=E1*(1-plowback ratio)/(market capitalization rate-ROE*plowback ratio)
=6*(1-60%)/(10%-15%*60%)
=$240.00

2.

=E1.market capitalization rate
=6/10%
=60.00

3.
=240.00-60.00
=180.00

5 0
Add a comment
Know the answer?
Add Answer to:
Sisters Corp. expects to earn $6 per share next year. The firm's ROE is 15% and...
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. Our experts will answer your question WITHIN MINUTES for Free.
Similar Homework Help Questions

  • please help! Sisters Corp expects to earn $7 per share next year. The firm's ROE is...

    please help! Sisters Corp expects to earn $7 per share next year. The firm's ROE is 14% and its plowback ratio is 60%. If the firm's market capitalization rate is 10%. a. Calculate the price with the constant dividend growth model. (Do not round intermediate calculations.) Price $ b. Calculate the price with no growth. Price $ c. What is the present value of its growth opportunities? (Do not round intermediate calculations.) PVGO

  • Sisters Corp expects to earn $7 per share next year. The firm's ROE is 12% and...

    Sisters Corp expects to earn $7 per share next year. The firm's ROE is 12% and its plowback ratio is 80% If the firm's market capitalization rate is 10% a. Calculate the price with the constant dividend growth model (Do not round Intermediate calculations Price b. Calculate the price with no growth Price $ c. What is the present value of its growth opportunities? (Do not round Intermediate calculations.) PVGO

  • Fet 3 Sisters Corp. expects to earn $9 per share next year. The firm's ROE is...

    Fet 3 Sisters Corp. expects to earn $9 per share next year. The firm's ROE is 15% and its plowback ratio is 50%. If the firm's market capitalization rate is 10%. a. Calculate the price with the constant dividend growth model. (Do not round intermediate calculations.) Price $ 117 b. Calculate the price with no growth Price 36 nces c. What is the present value of its growth opportunities? (Do not round intermediate calculations.) PVGOS 82

  • Firm Z expects to earn $3 per share next year. the firm's ROE is 11% and...

    Firm Z expects to earn $3 per share next year. the firm's ROE is 11% and its plowback ratio is 55%. if the firm's market capitalization rate is 8%, what is the present value growth opportunities?

  • MedTech Industries expects earnings of $1 per share next year. Its return on equity (ROE) is...

    MedTech Industries expects earnings of $1 per share next year. Its return on equity (ROE) is 15% and its plowback ratio is 60%. The company's stock price is $40. A) What is the cost of capital of this company? (Note: Your answer should be a number in percentage form. Do not enter '%'.) ____% B) How much of the company's stock value is attributable to the present value of its growth opportunities (PVGO)? $_____

  • Grott and Perrin, Inc., has expected earnings of $3 per share for next year. The firm's...

    Grott and Perrin, Inc., has expected earnings of $3 per share for next year. The firm's ROE is 20%, and its earnings retention (plowback) ratio is 40%. If the firm's required rate of return is 15%, what is the present value of its growth opportunities (PVGO)?

  • Firm Y expects to earn $6 per share next year. In the next three years, the...

    Firm Y expects to earn $6 per share next year. In the next three years, the firm’s ROE is expected to be 12%, 15%, 18%, respectively, and its dividend payout ratio is 90%. After that, the firm's ROE is expected to increase to 25%, and the firm will set the dividend payout ratio = 60%. Assume that the discount rate is 20%. Find the stock price. a) 30.17 b) 39.72 c) 34.68 d) 33.29

  • The market consensus is that Analog Electronics Corporation has an ROE = 15%, a beta of...

    The market consensus is that Analog Electronics Corporation has an ROE = 15%, a beta of 1.90, and plans to maintain indefinitely its traditional plowback ratio of 1/5. This year’s earnings were $3.20 per share. The annual dividend was just paid. The consensus estimate of the coming year’s market return is 16%, and T-bills currently offer a 5% return. a. Find the price at which Analog stock should sell. (Do not round intermediate calculations. Round your answer to 2 decimal...

  • 8. Ace Ventura, Inc., has expected earnings of $5)per share for next year. The firm's ROE...

    8. Ace Ventura, Inc., has expected earnings of $5)per share for next year. The firm's ROE 0%, is 15%, and its earnings retention ratio is 40%. If the firm's market capitalization rate i what is the present value of its growth opportunities?

  • The market consensus is that Analog Electronic Corporation has an ROE of 9% and a beta...

    The market consensus is that Analog Electronic Corporation has an ROE of 9% and a beta of 1.25. It plans to maintain indefinitely its traditional plowback ratio of 2/3. This year's earnings were $3 per share. The annual dividend was just paid. The consensus estimate of the coming year's market return is 14%, and T-bills currently offer a 6% return. a. Find the price at which Analog stock should sell. (Do not round intermediate calculations. Round your answer to 2...

ADVERTISEMENT
Free Homework Help App
Download From Google Play
Scan Your Homework
to Get Instant Free Answers
Need Online Homework Help?
Ask a Question
Get Answers For Free
Most questions answered within 3 hours.
ADVERTISEMENT
ADVERTISEMENT