FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Sisters Corporation expects to earn $7 per share next year. The firms ROE is 14% and its plowback ratio is 60%. The firms market capitalization

Sisters Corporation expects to earn $7 per share next year. The firms ROE is 14% and its plowback ratio is 60%. The firms market capitalization rate is 10%. Required:

a. Calculate the price with the constant dividend growth model. (Do not round intermediate calculations.) b. Calculate the price with no growth. c. What is the present value of its growth opportunities? (Do not round intermediate calculations.)

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

Mergers, Acquisitions and Other Restructuring Activities

Mergers, Acquisitions and Other Restructuring Activities

Authors: Donald DePamphilis

8th edition

9780128024539, 128013907, 978-0128013908

More Books

Students also viewed these Finance questions

Question

★★★★★
The following subsequent event was disclosed in Dole Food Companys 2009 annual report: Note 24: Subsequent Event On February 27, 2010, a significant earthquake struck the country of Chile. Although...

Answered: 1 week ago

Question

★★★★★
A sample of 12 small accounting firms reveals the following numbers of professionals per office. a. Determine the mean absolute deviation. b. Determine the variance. c. Determine the standard...

Answered: 1 week ago

Question

★★★★★
Are there particular hegemonies (i.e., social, cultural, ideological, or economic influences exerted by a dominant group) that are taken for granted within the organization? Can you think of concrete...

Answered: 1 week ago

Question

★★★★★
Premium Doors Inc. purchased equipment on January 1, 2013, for $250,000. At that time it was estimated that the equipment would have a 5-year life and no salvage value . On December 31, 2014, the...

Answered: 1 week ago

Question

★★★★★
Sisters Corporation expects to earn $7 per share next year. The firms ROE is 14% and its plowback ratio is 60%. The firms market capitalization rate is 10%. Required: a. Calculate the price with the...

Answered: 1 week ago

Question

★★★★★
1. We want to use an affine cipher for encryption and decryption but we are limited to the first 14 letters of the alphabet for all plaintext and ciphertext. How many keys are there for this affine...

Answered: 1 week ago

Question

★★★★★
After reading aloud a certain fable to his fifth graders, mr osmet asks some students 'so who can you tell me the moral of this story> When the students don't respond immediately he tells them, "the...

Answered: 1 week ago

Question

★★★★★
The following table gives amount of annual spending of a country s defense budget in billions of dollars for military construction Let x 12 correspond to the year 2012 Sketch the graph of the...

Answered: 1 week ago

Question

★★★★★
Post an explanation of how identity, privilege, power, and oppression influence professional practice based on Janet Helms's explanation in the Microtraining Associates video. Then explain the...

Answered: 1 week ago

Question

★★★★★
VWX Inc., has sales of $500,000, net income of $80,000, dividend payout of 50%, total assets of $700,000 and target debt-equity ratio of 1.5. If the company grows at its sustainable growth rate in...

Answered: 1 week ago

Question

★★★★★
Because a mother does not want to "spoil" her new born baby. She feeds and takes care of her baby's physical needs when she thinks the baby needs care, not when the baby cries to indicate their...

Answered: 1 week ago

Previous Question Next Question