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Harman [31]
1 year ago
8

The intrinsic value of a company’s stock, also known as its fundamental value, refers to the stock’s "true" value based on accur

ate risk and return data. The value perceived by stock market investors determines the market price of a stock. A stock trading at a price below its intrinsic value is considered to be undervalued. A stock trading at a price above its intrinsic value is considered to be overvalued.
The goal of the managers of a publicly owned company should be to maximize the firm's_______

An analyst with a leading investment bank tracks the stock of Mandalays Inc. According to her estimations, the value of Mandalays Inc.'s stock should be $37.32 per share, but Mandalays Inc.'s stock is trading at $45.59 per share on the New York Stock Exchange (NYSE). Considering the analyst's expectations, the stock is currently:

a. in equilibrium

b. undervalued

c. overvalued
Business
1 answer:
slava [35]1 year ago
3 0

Answer:

The goal of the managers of a publicly owned company should be to maximize the firm's <u>INTRINSIC VALUE</u>.

The board of directors' and upper management's main goal is to maximize the corporation's value in order to maximize stockholders' wealth.

An analyst with a leading investment bank tracks the stock of Mandalays Inc. According to her estimations, the value of Mandalays Inc.'s stock should be $37.32 per share, but Mandalays Inc.'s stock is trading at $45.59 per share on the New York Stock Exchange (NYSE). Considering the analyst's expectations, the stock is currently:

  • c. overvalued

If the analyst considers that the stock's intrinsic price is $37.32 and the market price is $45.59, this means that currently the stock is overvalued.

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Protec Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is
taurus [48]

Answer:

The correct answer is 8.23%.

Explanation:

According to the scenario, the computation can be done as:

WACC of debt = Respective costs of debt× Respective weight of debt

= (0.4 × 5)

= 2

WACC of preferred = Respective costs of preferred × Respective weight of preferred

= (0.15 × 7)

= 1.05

WACC of common equity = Respective costs of common equity × Respective weight of retained earning

= (0.45 × 11.5)

= 5.175

So, Total WACC = WACC of debt + WACC of preferred + WACC of common equity

= 2 + 1.05 + 5.175

= 8.225 or 8.23 (approx.)

3 0
2 years ago
Tyler Holdlong owns a small retail property that he inherited from his father. There are no mortgages or interest expenses conne
-Dominant- [34]

Answer:

$6450

Explanation:

Given that

Monthly gross income = 3500

Monthly operating expenses = 1100

Tax rate = 25%

Annual cost recovery expenses = 3000

Recall that, taxable income is income less expenses.

Therefore,

Annual gross income = 3500 × 12

= 42000

Annual operating expense = 1100 × 12

= 13200

Thus,

Taxable income = 42000 - 13200 - 3000

= 25800

Tax liability = tax rate × taxable income

= 0.25 × 25800

= $6450

6 0
2 years ago
Read 2 more answers
f covered interest arbitrage opportunities do not exist, Group of answer choices interest rate parity holds. interest rate parit
kodGreya [7K]

Answer: interest rate parity holds

Explanation:

Covered interest arbitrage is a trading strategy that is used by an investor when the person whereby takes advantage of the differences in interest rate between two nations and invest in the currency that brings higher value.

If covered interest arbitrage opportunities do not exist, it simply means that interest rate parity holds.

7 0
2 years ago
The core revenue principle states that
Nastasia [14]

Answer:

B

Explanation:

Companies recognize revenue when goods or services are transferred to customers for the amount the company expects to be entitled to receive in exchange for those goods or services.

8 0
2 years ago
What is the maximum amount you would pay for an asset that generates an income of $ 250,000 at the end of each of five years if
Galina-37 [17]

Answer:

170,146

Explanation:

$250,000 / (1.08)5= 170,146

3 0
2 years ago
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