Computing Stock Price

The Carlton Corporation has $4 million in earnings after taxes and 1 million shares outstanding. The stock trades at a P/E ratio of 20. THE firm has $3 million in excess cash. A. Compute the current price of the stock. B.If the 3 million is used to pay dividends , how much will dividends per share be? C.If the 3million is to repurchase shares in the market at a price of$83 per share, how many shares will be acquired? Round to the nearest share. E. If the P/E ratio remains constant, what will the price of the securities be? By how much in terms of dollars, did the repurchase increase the stock price? D. What will the new earning per share be? Round to two place to the right of the decimal... click for more

Break even point for operating expanses before and after expansion in sale dollars.

Highland Cable Company is considering an expansion of its facilities. Highland Cable is currently financed with 50 percent debt and 50% equity common stock par value of $10.To expand the facilities Mr Highland estimates a need for 2 million in additional financing. His investment banker has laid out three plans 1. Sell $2million of debt at 13% 2. Sell $2 million of common stock at $20 per share. 3.Sell 1 million debt at 12 % and 1 million of common stock at $25 per share. Variable cost are expected to stay at 50% of sales while fixed expenses will increase to 1900,000 per year. Mr Highland is no sure how much this expansion will add to sales, but he estimates that sale will r... click for more

NPV/IRR

A new computer system will require an initial outlay of $20,000 but it will increase the firm's cash flows by $4,000 a year for each of the next 8 years. Is the system worth installing if the required rate of return is 9 percent? What if it is 14 percent? How high can the discount rate be before you would reject the project?

Risk Premiums

Here are stock market and Treasury bill returns between 1997 and 2001: Year Stock Market Return T-Bill Return 1997 31.29 5.26 1998 23.43 4.86 1999 23.56 4.68 2000 -10.89 5.89 2001 -10.97 3.83 a. What was the risk premium on common stock in each year? b. What was the average risk premium? c. What was the standard deviation of the risk premium?

Loan Table Calculations

Loan Table Calculations. See attached file for full problem description. 1. Your loan $12,000 to your brother-in-law at 10% interest for six months. At the end of 6 months, you calculate how much he owes you and calculate the interest on that amount for the next six-month period. This continues for three years. Make a table showing how the amount owed increases. 2. Continuing this same process, calculate how much your brother-in-law will owe you 6 years after the loan was made. 1. If $125,000 is invested and receives a return of 8.4% compounded quarterly, what will it be worth in 16 years? 2. Find the Principle that will grow into $1,000,000 in 20 years at 10% compounded annua... click for more