a. If the appropriate discount rate is 14 percent and all cash flows are received at year's end, what is the price per share of Rite Bite stock? Price per share $ 28.43 b. Rite Bite has decided to produce toothbrushes. The project requires an immediate outlay of $17.8 million. In one year, another outlay of $6.8 million will be needed. The year after that, earnings will increase by $5.0 million. That profit level will be maintained in perpetuity. What will the new stock price be if the project is undertaken? Price per share $ 50.42

a. If the appropriate discount rate is 14 percent and all cash flows are received at year's end, what is the price per share of Rite Bite stock? Price per share $ 28.43 b. Rite Bite has decided to produce toothbrushes. The project requires an immediate outlay of $17.8 million. In one year, another outlay of $6.8 million will be needed. The year after that, earnings will increase by $5.0 million. That profit level will be maintained in perpetuity. What will the new stock price be if the project is undertaken? Price per share $ 50.42

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Create an income statement and a balance sheet from the information below (this information is repeated but remains the same on other questions). Assume that the income tax rate for Peter's cookies is 6% and Peter's cookies does not incur any additional debt, issue any additional stock or distribute any dividends (hint: round up taxes to next whole dollar and net income is equal to retained earnings). Financial data Cash Cost of goods sold Short term debt Sales(revenue) Building Long term debt Expenses Inventory Interest expense $88,666 $66,688 $88,866 12,000 $66,888 90,555 100,000 241,055 175,000 Equipment 32,733 Accounts payable 122,000 Accounts receivable 36,000 Equity 35,000 Marketable securities 150,000 As of December 31, 2012 what is the net income for Peter's Cookies 120,000 73,555 37,955 6,000
The most recent financial statements for Zoso, Inc are shown here assuming no income taxes: income statement: sales $4,200, cost 3,450, net income $750, assets $14,600, total $ 14,600, debt $11,100, equity 3,500, total $14,600. Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next years sales are projected to be $5,970. What is the external financial needed?
Borland, Inc., has a profit margin of 6.5 percent on sales of $2,600,000. Assume the firm has debt of 8,700,000 and total assets of $15,300,000. What is the firm's ROA? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Ladders, Inc. has a net profit margin of 5.2% on sales of $50.6 million. It has book value of equity of $38.1 million and total book liabilities of $30.9 million. What is Ladders' ROE? ROA? Note: Assume the value of Interest Expense is equal to zero. What is Ladders' ROE? Ladders' ROE is enter your response here %. (Round to two decimal places.) Part 2 What is Ladders' ROA? Ladders' ROA is enter your response here %. (Round to two decimal places.)
Denver, Incorporated, has sales of $14.2 million, total assets of $11.3 million, and total debt of $4.9 million. Assume the profit margin is 5 percent. a. What is net income? (Do not round intermediate calculations and enter your answer in dollars not in millions, e.g., 1,234,567.) b. What is ROA? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) c. What is ROE? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Net income, b. ROA c. ROE % %
Beckinsale, Inc., has a profit margin of 5.8 percent on sales of $16,000,000. If the firm has debt of $7,900,000 and total assets of $14,000,000. Required: What is the firm's ROA? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).) ROA
Pop Evil, Inc.'s net income for the most recent year was $22,817. The tax rate was 21 percent. The firm paid $4,081 in total interest expense and deducted $5,991 in depreciation expense. What was the cash coverage ratio for the year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Cash coverage ratio times
Leonatti Labs’ year-end price on its common stock is $22. The firm has a profit margin of 12 percent, total assets of $35 million, a total asset turnover of 0.60, no preferred stock, and 2 million shares of common stock outstanding. Calculate the PE ratio for Leonatti Labs. (Do not round intermediate calculations. Round your answer to 2 decimal places.) PE ration = _____.__ times
Aquilera, Inc., has sales of $18.8 million, total assets of $13.8 million, and total debt of $4.6 million. The profit margin is 11 percent. What is the company's net income? (Enter your answer in dollars, not millions of dollars, e.g., 1,234,567. Do not round intermediate calculations and round your answer to the nearest whole number, e.g., 32.) Net income What is the company's ROA? (Do not round, intermediate calculations and enter your answer as a percent rounded 2 decimal places, e.g., 32.16.) ROA % What is the company's ROE? (Do not round intermediate calculations and enter your answer as a percent rounded 2 decimal places, e.g., 32.16.) ROE %
5:42 Rite Bite Enterprises sells toothpicks. Gross revenues last year were $7.8 million, and total costs were $3.7 million. Rite Bite has 1.0 million shares of common stock outstanding. Gross revenues and costs are expected to grow at 5 percent per year. Rite Bite pays no income taxes. All earnings are paid out as dividends. (Do not round intermediate calculations and round your answers to 2 decimal places. (e.g., 32.16)) a. If the appropriate discount rate is 15 percent and all cash flows are received at year's end, what is the price per share of Rite Bite stock? Price per share $ 43.05 ok ht ences b. Rite Bite has decided to produce toothbrushes. The project requires an immediate outlay of $17.3 million. In one year, another outlay of $6.3 million will be needed. The year after that, earnings will increase by $4.5 million. That profit level will be maintained in perpetuity. What will the new stock price be if the project is undertaken? Price per share $
The most recent financial statements for Hornick, Inc., are shown below (assuming no income taxes). Assets and costs are proportional to sales. Debt and equity are not. No dividends are paid. Next year's sales are projected to be $8,968. What is the external financing needed? Income statement $ $ Next year's sales $ Sales Costs Net income 7,600 5,180 2,420 Sales Costs Net income 8,968 Pro forma income statement External financing Assets $ Total $ Complete the following analysis. Do not hard code values in your calculations. Percent increase in sales Assets Balance sheet 21,700 Debt Equity 21,700 Total $ Total $ Pro forma balance sheet Debt Equity Total 9,100 12,600 21,700 ▬▬▬▬
Fondren Machine Tools has total assets of $3,180,000 and current assets of $882,000. It turns over Its fixed assets 1.8 times per year. Its return on sales is 5.5 percent. It has $1,410,000 of debt. What is its return on stockholders' equlty? (Do not round Intermediate calculations. Input your answer as a percent rounded to 2 decimal places.) Return on stockholders' equity

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