Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

please answer all rest part 7 Problem 18-14 10 The Digital Electronic Quotation System IDEGS) Corporation pays no cash dividends currently and is not expected

image text in transcribedplease answer all rest partimage text in transcribed

7 Problem 18-14 10 The Digital Electronic Quotation System IDEGS) Corporation pays no cash dividends currently and is not expected to for the next five years. Its latest Eps was $15.00, of which was reinvested in the company. The firm's expected ROE for the next five years is 22% 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 17%. 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 245per year a. What is your estimate of DEQS's intrinsic value per share? (Do not found intermediate calculations. Round your answer to 2 decimal places) Answer is complete and correct. 48.400 D. Assuming its current market price is equal to its intrinsie value, what do you expect to happen to its price over the next year? Wound your dollar value to 2 decimal places) Answer is not complete. per year until your Price wil RY 7 Because there is no dividend the entire retum must be in capital gains Answer is not complete. Price in one year 10 6. What do you expect to happen to price in the following year? (Round your dollar value to a decimal places) Answer is not complete. Price o years d. What is your estimete of DESS intrinsic value per share if you expected DEOS to pay out only 30% of earnings starting in year 6? (Do not found intermediate calculations. Round your answer to 2 decimal places) Answer is complete and correct. 38.37 wale

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Principles Of Finance With Excel

Authors: Simon Benninga, Tal Mofkadi

3rd Edition

0190296380, 9780190296384

More Books

Students also viewed these Finance questions

Question

understand what working means to workers;

Answered: 1 week ago

Question

Invoking return the number of the elements in an arraylistx

Answered: 1 week ago

Question

What do you think accounts for the fact that turnover is low?

Answered: 1 week ago