The price of a product is 30 dollars per unit. A firm can produce this good with variable costs of 20 dollars per unit and fixed cost of 10000 dollars. What is the breakeven level of output? A 100 perpetual preferred stock pays an annual dividend of 10 dollars. Calculate the price if current yields on comparable preferred stock are 9 percent?
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The price of a product is 30 dollars per unit. A firm can produce this good with variable costs of 20 dollars per unit and fixed cost of 10000 dollars. What is the breakeven level of output?
A 100 perpetual
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- Even Better Products has come out with an even better product. As a result, the firm projects an ROE of 20%, and it will maintain a plowback ratio of 0.40. Its earnings this year will be $2 per share. Investors expect a 14% rate of return on the stock.Required: a. At what price and P/E ratio would you expect the firm to sell? (Do not round intermediate calculations. Round your answers to 2 decimal places.) b. What is the present value of growth opportunities? (Do not round intermediate calculations. Round your answer to 2 decimal places.) c. What would be the P/E ratio and the present value of growth opportunities if the firm planned to reinvest only 20% of its earnings? (Do not round intermediate calculations. Round your answers to 2 decimal places.)You own a well-established energy drink company that sells 50M units per year at a price of $2.50 per unit. The variable cost of producing each unit is $1.00, and the annual fixed cost of operating the business is $50M. The business is all-equity and has an equity beta of 0.90. Assume a risk-free rate of 3 percent and a market risk premium of 6 percent. a) What is the present value of the first five net cash flows (total revenues minus total variable costs minus fixed costs) produced by this business? You are worried about regulation being passed in five years that would limit the amount of caffeine that can be contained in an energy drink. You forecast that you will only be able to sell 34M units per year in perpetuity starting at t-6 if this regulation is passed (the price, variable cost, and fixed cost would remain unchanged). If the regulation is not passed, you will continue selling 50M units per year in perpetuity. b) From the point of view of t=5, what is the present value of…You are selling short 1000 shares of company A, which is currently selling its shares for $100/share. This company is paying a dividend of 0.8$ per share. The initial margin is 50%. Set the initial balance sheet. • Set the balance sheet in case the price goes up 20% If the maintenance margin is 40%, how much can the price increase before the investor would get a margin call? What will be the rate of return if the price of the stock fell to 90$? What will be the rate of return in case the price increases to 120$?
- You are considering buying stock A. If the economy grows rapidly, you may earn 20 percent on the investment, while a declining economy could result in a 15 percent loss. Slow economic growth may generate a return of 3 percent. If the probability is 19 percent for rapid growth, 25 percent for a declining economy, and 56 percent for slow growth, what is the expected return on this investment? Round your answer to one decimal place. %A company has a project with initial investment is $40,000. It will generate $15,000 annually for the next four years. Assume that this company and its project have a beta of 2.0, the risk-free rate of return (ie., Rm) is 2%, and the market return (i.e., Rm) is 796?. How much is the NPV of this project? [Hint: As discussed, the CAMP model can be used to estimate discount rate (r) in the NPV analysis equation). A) 5,555 B) 3,333 4,444 6,666The market capitalization rate for Admiral Motors Company is 12%. Its expected ROE is 9%. If the firm's plowback ratio is 50%, what will be its P/E ratio? Round your answer to one decimal place.
- A company has a project with initial investment is $40,000. It will generate $15,000 annually for the next four years. Assume that this company and its project have a beta of 2.0, the risk-free rate of return (i.e., R is 296, and the market return (Le., R is 796?. How much is the NPV of this project? [Hint: As discussed, the CAMP model can be used to estimate discount rate (r) in the NP analysis equation]. A) 5,555 B) 3,333 C) 4,444 D) 6,666You are bullish on XYZ stock. The current market price is $100 per share, and you have $10,000 of your own to invest. You borrow an additional $10,000 from your broker at an interest rate of 8% per year and invest $20,000 in the stock. WHAT IS THE margin call if the maintenance margin is 30%? Assume the price IS $115 one year LATER.Jersey Jewel Mining has a beta coefficient of 1.2. Currently the risk-free rate is 2 percent and the anticipated return on the market is 8 percent. JJM pays a $4.50 dividend that is growing at 4 percent annually. What is the required return for JJM? Given the required return, what is the value of the stock? If the stock is selling for $100, what should you do? If the beta coefficient declines to 1.0, what is the new value of the stock? If the price remains $100, what course of action should you take given the valuation in d? Could you write the answers in an equation form so i can understand what or how the formulas work
- ABC Corp. has a beta of 0.7. The risk-free rate is 6 percent and the expected return on the market is 13 percent. What is the maximum that a firm would pay for a project with a beta of 1.2 that pays $15,000 per year in perpetuity? $69,444 $104,167 $115,385 $137,615 $99,338Jersey Jewel Mining has a beta coefficient of 1.2. Currently the risk-free rate is 2 percent and the anticipated return on the market is 8 percent. JJM pays a $4.50 dividend that is growing at 4 percent annually. What is the required return for JJM? Given the required return, what is the value of the stock? If the stock is selling for $100, what should you do? If the beta coefficient declines to 1.0, what is the new value of the stock? If the price remains $100, what course of action should you take given the valuation in d?A stock sells for a price of $60. Next year's dividend will be $3 per share. If the ROE ("project return") on reinvested funds is 10% and the company has a payout ratio of 40%, what must be the market rate (r)?