If I have a Return on Equity of -25,530%, how do I interpret that? My professor is looking for an answer such as "Home Depot generated a profit of about X cents for every dollar in its average equity throughout the year".
Q: Wendell's Donut Shoppe is investigating the purchase of a new $33,000 donut-making machine. The new…
A: Capital budgeting refers to the process of allocating capital to projects that generate returns for…
Q: The McDaniel family is purchasing a home, and their mortgage. The home costs $156,000 and they have…
A: First we need to use loanbsp;loan amotorization formula below to calculate monthly payment. where…
Q: elect the preferred alternative. Choose the correct answer below. A. Alternative A OB. Alternative C…
A: Investment Alternatives AnalysisObjectiveTo evaluate and select the most attractive investment…
Q: /2 which of the following circumstances will a mortgage loan originator be permitted more than 120…
A: A mortgage loan originator may be permitted more than 120 days of temporary authority when the…
Q: What is the payback perlod for the following set of cash flows? Year Cash Flow -$ 0 5,000 T 1 2,100…
A: The stream of money that moves inside and out of the company for a period is known as cash flow.…
Q: Marble Construction estimates that its WACC is % f equity comes from retained earnings However, if…
A: Internal Rate of ReturnA financial indicator called the internal rate of return (IRR) is used to…
Q: X Katle Pairy Fruits Incorporated has a $2,400 16-year bond outstanding with a nominal yield of 17…
A: Current price of bond is present value of all future cash flows (i.e. coupon payments and principle…
Q: 3. A stock had returns of 17 percent, 19 percent, 20 percent, 8 percent, 17 percent, and 11 percent…
A: Rate of Return year 1 = r1 = 17%Rate of Return year 2 = r2 = 19%Rate of Return year 3 = r3 = 20%Rate…
Q: Find the value of a retirement savings account paying an APR of 5.8% after 45 years (contributions…
A: We need to use future value of ordinary annuity formula to calculate value of of your retirement…
Q: EJH has a beta of 1.2, CSH has a beta of 0.6, and KMS has a beta of 1. If you put 25% of your money…
A: In this question, we are required to calculate the beta of the portfolio.
Q: Your company is considering the replacing an old machine with a more efficient model. The new…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
Q: Molin Inc. is considering to a project that will have the following series of cash flow from assets…
A: Cash flow for Year 0 = cf0 = -1580.92Cash flow for Year 1 = cf1 = 453Cash flow for Year 2 = cf2 =…
Q: Stock Split Fauver Enterprises declared a 4-for-1 stock split last year, and this year its dividend…
A: In this question, we are required to determine last year's dividend.
Q: A. Project L requires an initial outlay at t = 0 of $55,000, its expected cash inflows are…
A: A dollar received in the future is worth less than a dollar received today, which the statistic…
Q: H3. please show proper step by step calculation Good Time Company is a regional chain department…
A: The expected return is the estimation of profit or loss that an investor determines from his…
Q: Exercise 13.3 P416-445 a. Calculate the price of a firm with a plowback ratio of .60 if its ROE is…
A: Variables in the question:Plowback ratio=0.60ROE=20% =0.20E1=$5 per sharek=12.5%=0.125
Q: Raul Fletes borrowed $9,500 on a 90-day note that required ordinary interest at 11.97%. Raul paid…
A: Interest PaymentsInterest payments refer to the money paid by a borrower to a lender for the use of…
Q: Lou Barlow, a divisional manager for Sage Company, has an opportunity to manufacture and sell one of…
A: Product AProduct BInvestment$218,150.00$410,000.00Sales revenue$280,000.00$380,000.00Variable…
Q: Calculate the initial outlay and depreciable value of the project. Calculate the annual after-tax…
A: Since you have posted a question with multiple sub-parts, we will solve the first three sub-parts…
Q: (IRR calculation) Determine the internal rate of return on the following project: An initial outlay…
A: IRR is also known as Internal rate of Return. It is a capital budgeting technique which helps in…
Q: At the beginning of the year, Camille purchased 300 shares of stock at $25.50 per share, then sold…
A: When an investor carries out a transaction that involves the purchase or sale of a security with the…
Q: A project has estimated annual net cash flows of $30,500. It is estimated to cost $115,900.…
A: Payback period is the period required to recover initial investment of the project that is being…
Q: Sapp Trucking's balance sheet shows a total of noncallable $30 million long-term debt with a coupon…
A: The book value WACC may be less and it may lead to incorrect investment decisions. That is why the…
Q: Operating cash flow. Huffman Systems has forecasted sales for its new home alarm systems to be…
A: Annual operating cash flows in the sum of net operating income and non-cash expenses like…
Q: ou have determined in your mind that you would like to have a business of your own, although your…
A: Variables in the question:The cost of improvements to the property = $1,500,000Cost of bar stools,…
Q: If the company's rate of require is 5%, what is the Net Future Value of this project? Round your…
A: Net Present Value (NPV): NPV is based on the concept of the time value of money, which recognizes…
Q: A bank client has a debt of 12,425 pesos including interest to be paid in 12 months. The debtor…
A: In simple interest loans are paid by payment of simple interest on loan and there is no compounding…
Q: K Annika bought euro denominated bonds when the exchange rate was 909 euro to the dollar. She paid…
A: The holding period return can be found by using the following mathematical expression:Where:P0 is…
Q: ! Required information [The following information applies to the questions displayed below.] A…
A: In this question, we are required to determine the quality of income ratio.
Q: of a mortgage reduces both the size of the monthly payments and the Calculate (a) the reduction in…
A: Down payment is the initial amount of out of pocket cash payment made for the loan , down payment…
Q: As an active fund manager, you have obtained information on three individual stocks, the market…
A: Weighted average = expected return / standard deviation.Stock 1=20/80∗100.=25%.Stock…
Q: At the height of his fortune, Masayoshi Son, a Japanese businessman known for making very accurate…
A: Masayoshi Son experienced a significant loss during the dotcom bubble burst, losing over $59 billion…
Q: Max and Wendy have a MAGI of $55,000. They are married and file jointly. Max has a student loan…
A: The question is asking us to calculate the amount of student loan interest that Max and Wendy can…
Q: Tippy Toe Spa Company offers various services, such as facials, laser hair removal and…
A: An asset's useful life refers to the period up to which the asset is expected to work in a proper…
Q: Suppose you make a 2-year investment of $100,000 and it grows by 100% to $200,000 during the first…
A: “Since you have posted multiple questions, we will provide the solution only to the first question…
Q: Hanover Tech is currently an all equity firm that has 600,000 shares of stock outstanding with a…
A: The value of the unlevered firm can be found by multiplying the price per share by the total number…
Q: Compute the NPV for Project M if the appropriate cost of capital is 7 percent. (Negative amount…
A: NPV is also known as Net Present Value.. It is a capital budgeting technique which helps in decision…
Q: Case study a. Let's say your friend offer simple investment. You are planning to buy an asset for RM…
A: Rate of return is the amount of profit earned on the investment and this is the percenatge of the…
Q: What would you be willing to pay (now) for the following yearend cash flows if your required return…
A: The concept of time value of money will be used here. As per the concept of time value of money the…
Q: Dunbar Inc has an overall (composite) WACC of 10%, which reflects the cost of capital for its…
A: Risk refers to the potential for loss or failure in an investment or business venture. It is an…
Q: A pension fund manager is considering three mutual funds. The first is a stock fund, the second is a…
A: Please mention What to find in this question The standard deviation is a statistical metric that…
Q: Situational Software Co. (SSC) is trying to establish its optimal capital structure. Its current…
A: Data given:Debt=25%Equity=75%Risk-free rate=3%Market risk premium=5%Tax rate=40%Cost of equity =15%
Q: Runtan Inc. has just paid an annual dividend of $0.45 per share. Analysts expect the firm's…
A: In this question, we are required to determine the best guess for the cost of equity based on…
Q: 3. Number of cars parked in a parking lot is an example of a O continuous O discrete variable.
A: number of cars parked in a parking lot is an example of a discrete variable.Discrete variables are…
Q: You want to buy a $24,000.00 car. You can make a 10% down payment, and will finance the balance with…
A: Annuity refers to a series of cash flows that occurs on a periodic basis. Here the loan will be paid…
Q: 6 Kiko Peleh. Kiko Peleh writes a put option on Japanese yen with a strike price of $0.008000=¥1.00…
A: The put option refers to the right to sell the underlying asset at the strike price before or on the…
Q: A certain convertible bond has a conversion ratio of 30 and a conversion premium of 15%. The current…
A: Given Values:Conversion ratio is 30Conversion premium is 15%Current market price is $30The…
Q: The Caldwell Herald newspaper reported the following story: Frank Ormsby of Caldwell is the state's…
A: Given data,Total money in week's grand prize=$1.34 millionNumber of installments=20Amount per…
Q: One can use Black-Scholes model to price any financial derivatives. true or false
A: The Black-Scholes model was specifically designed to value European-style options on non-dividend…
Q: SW Company provides the Equity & Liability Information below for analysis. SW Company had net Income…
A: Equity returns in terms of percentage can be found by dividing the net income by the amount of…
If I have a
Step by step
Solved in 3 steps
- You have been asked by your employers to demonstrate your knowledge in business valuation process, by analyzing the value of Best Group Savings and Loans Company (BGSLC). The company paid a dividend of GH¢ 250,000 this year. The current return to shareholders of companies in the same industry as BGSLC is 12%, although it is expected that an additional risk premium of 2% will be applicable to BGSLC, being a smaller and unquoted company. Compute the expected valuation of BGSLC, if: The current level of dividend is expected to continue into the foreseeable future The dividend is expected to grow at a rate 4% par into foreseeable future The dividend is expected to grow at a 3% rate for three years and 2% afterwardsAssume that you are a consultant to Broske Inc., and you have been provided with the following data: D1 = $0.80; P0 = $32.50; and g = 8.00% (constant). What is the cost of equity from retained earnings based on the DCF approach?A company hired you as a consultant to help estimate its cost of capital. You have obtained the following data: D0 = $2.45; P0 = $28.96; and g = 4.06% (constant). What is the cost of equity from retained earnings? Do not round your intermediate calculations. Express your answer as a percent rounded to two decimal places.
- Martin Tucker Enterprises has total common equity of $645,500, sales of $1.15 million, and a profit margin of 3.6 percent. What is the return on equity? Can the calculator and excel solution be provided?Keller Cosmetics maintains an operating profit margin of 9.00% and a sales-to-assets ratio of 3.90. It has assets of $700,000 and equity of $500,000. Assume that interest payments are $50,000 and the tax rate is 30%. a. What is the return on assets? (Enter your answer as a percent rounded to 2 decimal places.) b. What is the return on equity? (Enter your answer as a percent rounded to 2 decimal places.) Sara Togas sells all its output to Federal Stores. The following table shows selected financial data, in millions, for the two firms: Sales Interest Payment Net Income Assets at Start of Year Federal Stores $117 $21 $27 $67 Sara Togas 37 18 21 28.5 Assume tax rate is 35%. a. Calculate the sales-to-assets ratio, the operating profit margin, and the return on assets for the two firms. (Do not round intermediate calculations. Round the sales-to-assets ratio answers to 2 decimal places. Enter the operating profit margin and return on assets answers as a percent rounded to 2 decimal…An Investment company advertised that last year Its clients, on average, made a profit of 10%. Assuming that average refers to the mean, which of the following clalms must be true based on this information? Note: More than one statement could be true. If none of the statements is true, mark the appropriate box. This year at least one of their clients will make a profit of at least 10%. Last year all of their clients made a profit of more than 3%. Last year more than half of their clients made a profit of at least 10%. OLast year some of their clients made a profit of at least 10%. Last year some of their clients made a profit of exactly 10%. None of the above statements is true.
- 3)You are going to value Lauryn’s Doll Co. using the FCF model. After consulting various sources, you find that Lauryn’s has a reported equity beta of 1.4, a debt-to-equity ratio of .3, and a tax rate of 21 percent. Based on this information, what is the asset beta for Lauryn’s? 5)Lauryn’s Doll Co. had EBIT last year of $40 million, which is net of a depreciation expense of $4 million. In addition, Lauryn’s made $5 million in capital expenditures and increased net working capital by $3 million. Using the information from Problem 3, what is Lauryn’s FCF for the year?A company hired you as a consultant to help estimate its cost of capital. You have obtained the following data: D0 = $2.45; P0 = $28.96; and g = 4.06% (constant). What is the cost of equity from retained earnings? Do not round your intermediate calculations. Express your answer as a percent rounded to two decimal places. (For example, 4.567% should be entered as 4.57)You've collected the following information about Groot, Inc.: Profit margin Total asset turnover Total debt ratio Payout ratio = 4.44% = 3.50 = .25 = 29% a. What is the sustainable growth rate for the company? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What is the ROA? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Sustainable growth rate b. ROA % 15.54 %
- Red Spark Incorporated is interested in assessing the following scenarios on its indicators of profitability. Solve each scenario independently. a. Red Spark has taken significant steps to decrease expenses and expects its net income to increase by $8 million to $68 million. If its profit margin is 5.0%, what will the profit margin be after considering the decreased expenses? b. Red Spark has taken significant steps to decrease expenses and expects its net income to increase by $8 million to $68 million. If its average total assets are $494 million, what will its return on assets be?Tibbs Inc. had the following data for the most recent year: Net income = $300; Net operating profit after taxes (NOPAT) = $460; Total assets = $2,500; Short-term investments = $200; Stockholders' equity = $1,800; Total debt = $700; and Total operating capital = $2,300. What was its return on invested capital (ROIC)? Select the correct answer. a. 19.40% b. 20.00% c. 20.30% d. 20.60% e. 19.70%1.A Assume that a Peruvian company, DMB LLC, just reported its earnings this year. The reported revenue was $10 million and the reported cost was $9 million. The discount rate is 8%. Mark ALL the CORRECT statements. For this question, profit = revenue - cost. Hint: Apply the Gordon Formula to the profits of the firm. a) If the profit is expected to be constant, the present value of all the company's future profits is $125 million. b) If the profit is expected to grow 3% annually, the present value of all the company's future profits is $20 million. c) If the profit is expected to grow 4% annually, the present value of all the company's future profits is $25.75 million. d) If the profit is expected to grow 6% annually, the present value of all the company's future profits is $50 million. e) If the profit is expected to grow 10% annually, the present value of all the company's future profits is negative.