Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

What you are required to do with the financial statements attached to you are as follows: 1 - Construct a cash flow statement. 2 -

What you are required to do with the financial statements attached to you are as follows:
1- Construct a cash flow statement.
2- Calculate the historical average growth of net income.
3- Assuming that the net income of the following years starting from 2024 will be constant forever and equal to the "historical average growth of net income" you calculated multiplied by the net income of 2023,what is the value of equity of the company at the start of 2024? if the required rate of return is 7%.
4- Calculate the yearly dividend and the historical average growth of dividends.
5- Assuming that the dividend of the following years starting from 2024 will grow at a constant growth rate forever equal to the "historical average growth of dividends" you calculated, what is the price of 1 stock of the company at the start of 2024? if the required rate of return is 7% and the number of outstanding stock is 10000.
Note: 75% of the remaining net income after paying the dues of the preferred shares is distributed to the holders of common sharesholders. "Make sure you calculate the dividend correctly"
6- If the company wants to raise its long-term debt by 50% in 2024 in comparison to its long-term debt in 2023 by issuing bonds that pay a 5% coupon rate and have a maturity of 20 years, how many bonds must the company sell to achieve such a goal?
7- Assuming that the company wants to issue a 1000 preferred stock at the start of 2024 and has announced that it will pay a constant amount of 5 $ as a constant dividend for these stocks,How much will these stocks sell for if the required rate of return is 7%?Note: In regard to the historical financial statements:
1- Interest on long-term debts is 5% and on short-term debts is 1%.
2- The tax rate is 15%.
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

Personal Finance A Practical Approach

Authors: Jane King, Mary Carey

1st Edition

0199668833, 9780199668830

More Books

Students also viewed these Finance questions