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melomori [17]
2 years ago
15

The Digital Electronic Quotation System (DEQS) Corporation pays no cash dividends currently and is not expected to for the next

five years. Its latest EPS was $19.50, all of which was reinvested in the company. The firm’s expected ROE for the next five years is 15% per year, and during this time it is expected to continue to reinvest all of its earnings. Starting in year 6, the firm’s ROE on new investments is expected to fall to 10%, and the company is expected to start paying out 50% of its earnings in cash dividends, which it will continue to do forever after. DEQS’s market capitalization rate is 26% per year.What is your estimate of DEQS's intrinsic value per share? (Do not round intermediate calculations. Round your answer to 2 decimal places.)
Business
1 answer:
finlep [7]2 years ago
4 0

Answer:

$32.34

Explanation:

year                      dividend              EPS

0                              0                       $19.50

1                               0                       $22.43

2                              0                       $25.79

3                              0                       $29.66

4                              0                       $34.11

5                              0                       $39.22

6                              $21.57              $43.14

growth rate up to year 5 = 15%

ROE growth rate starting year 6 = 10%

sustainable growth rate starting year 6 = 10% x (1 - 50%) = 5%

cost of equity = 26%

horizon value at year 5 = $21.57 / (26% - 5%) = $102.71

current intrinsic value per stock = $102.71 / 1.26⁵ = $32.34

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Tcecarenko [31]

Based on the information provided:

Gross income is $486,000

Fixed expenses: $300,000

Variable expenses: $150,000

To find the percentage of gross profit first figure out the difference between the gross income and expenses which is: $486,000 - $300,000 - $150,000 = $36,000 then divide the gross income by the profit 486,000/36,000 and the answer is 13.5%.

7 0
2 years ago
John received a poor performance evaluation from his boss. On the weekend, he talks with his neighbor Faisal about his situation
leva [86]

Answer:

The correct answer is B. Informational support .

Explanation:

Information Support documents are those documents that help administrative management.

These documents have the following characteristics:

  • They are multiple copies.
  • They report a specific matter.
  • They support management, they can help in the decision-making process as supporting material, they can be official newsletters, books, magazines, publications or reports prepared by other institutions, etc.
  • Its value is merely informative and short term.
  • They do not testify to the activity of the institution and are not part of their Documentary Heritage, therefore, they will not be transferred to the General Archive and will be destroyed in the office where they have been managed.
5 0
2 years ago
Which of the following functions does an intelligent agent perform? Group of answer choices monitoring the Internet to screen ou
riadik2000 [5.3K]

Answer:

D. Classifying and indexing web pages for search engines.

Explanation:

An intelligent agent in artificial intelligence is an autonomous entity is set to perform specific foals using "observation" and "consequent actuators".

Intelligent agents can classify and index web pages for search engines, designed to learn and so improve its agency or labor.

4 0
2 years ago
Hawar International is a shipping firm with a current share price of $5.50 and 10 million shares outstanding. Suppose Hawar anno
Vika [28.1K]

Answer: a. $5.50

b. $6.1

c. $3,500,000

Explanation:

a. From the question, we are informed that Hawar International is a shipping firm with a current share price of $5.50 and 10 million shares outstanding and that Hawar announces plans to lower its corporate taxes by borrowing $20 million and repurchasing shares.

We are informed that Hawar announces plans to lower its corporate taxes by borrowing $20 million and repurchasing shares. This is a transaction and therefore, the value if the share won't be changed. So, the value for the share will still be $5.50.

b. If the only imperfection is corporate tax rate of 30%, the share price after this announcement will be:

= [30% × (20million/10million)] + $5.50

= [0.3 × 2] + $5.50

= $0.6 + $5.50

= $6.1

Therefore, the share price be after this announcement will be $6.1.

c. If the share price rises to $5.75 after this announcement, the PV of financial distress costs Hawar will incur as the result of this new debt will be:

= ($6.1 - $5.75) × 10,000,000

= $0.35 × 10,000,000

= $3,500,000

3 0
2 years ago
ACE Electronics introduces a new voice-activated personal computer that no longer requires a keyboard. ACE charges the high pric
ArbitrLikvidat [17]

Answer:

C) competition

Explanation:

ACE's new computer is in the introduction stage of the product life cycle. It is a very new and different product and therefore ACE can charge a high price until the growth stage begins. During the growth stage, the product's demand will increase and it will become a normal available product, that will attract several competitors into the market. Competitors might introduce newer versions of the product which are slightly different, but specially the price will be a decisive factor. As more competitors enter the market, the price will fall.

6 0
2 years ago
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