Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Prince Canning PLC has a stock market value of $ 8 0 0 , 0 0 0 . It had EBIT of $ 8 1

Prince Canning PLC has a stock market value of $800,000. It had EBIT of
$81,000 and net income of $43,000 on total sales of $366,000; their total
asset was $432,000, total book equity was $283,000 and total debt of
$250,000 at 7% borrowing cost. Its current assets were $250,000 and
current liabilities were $185,000. The company's stock had a beta of 1.2, and
market risk premium historically is 6%, risk free rate of 4% and tax rate of
30%.
(all numbers are in thousands)
Questions:
Calculate its current ratio;
Calculate debt coverage ratio (Times interest earned)
Calculate: profit margin (PM), total assets turnover (TAT) and equity
multiplier (EM)
Calculate its ROE using The DuPont identity
Calculate its cost of equity using CAPM
Calculate its WACC
ABC company pays a dividend of $2.00 and it's expected to grow at 10% for
the foreseeable future. Your required rate of return is 15%.
What's the value of the stock under the perpetual DDM?
image text in transcribed

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

The Principles Of Project Finance

Authors: Rod Morrison

1st Edition

1409439828, 9781409439820

More Books

Students also viewed these Finance questions

Question

conceptual data model diagram for down town car repair

Answered: 1 week ago

Question

Explain all drawbacks of application procedure.

Answered: 1 week ago

Question

What would you do?

Answered: 1 week ago