Illustrates the Gordon and Shapiro formula
What is the importance and the utility of the given formula: Ke = DIV(1+g)/P + g?
What is the importance and the utility of the given formula:
Ke = DIV(1+g)/P + g?
Expert
The given expression Ke = DIV(1+g)/P + g arrives from the Gordon and Shapiro formula to value shares as: P = DIV(1+g)/(Ke–g). In such formulas, P and DIV are identified and Ke and g are not identified. Some people take like g as expected growth of dividends the average of expectations of analysts, and after that they compute Ke (Ke computed in such way is usually termed as implicit).
But Ke computed in this way is just one of several that can be computed. The formula permits us to acquire pairs (Ke, g) which satisfy the equation.
Jenny is looking to invest in some 5-year bonds which pay annual coupons of 6.25 % and are presently selling at $912.34. What is the present market yield on these bonds? (Round to the closest Answer.) (1) 9.5% (2) 8.5% (3) 6.5% (4) 7.5%
Handy Inc has debt-to-assets ratio of 40%, tax rate of 35%, and total value of $100 million. W. C. Handy, the CFO, would like to increase the leverage ratio to 42%, and he believes that there will be no change in the bankruptcy cost of the company. How many dollars wo
Berks Corporation is expecting to have EBIT next year of $12 million, with a standard deviation of $6 million. Berks have $30 million in bonds with coupon of 10%, selling at par, which are being retired at the rate of $2 million annually. Berks also have 100,000 share
Who described option pricing with deterministic volatility?
Rusk Inc needs $50 million in new capital that it might obtain by selling bonds at par with coupon of 12% or by selling stock at $40 (net) per share. The current capital structure of Rusk consists of $300 million (face value) of 10% coupon bonds selling at 90 and 10 m
Which currency has to be utilized in an international acquisition in order to compute the flows?
a) The Australian firm sold a ship to a Swiss firm and gave the Swiss client an option of paying either AUS10,000 or SF15,000 in 9 months. (i) In above, the Australian firm efficiently gave the Swiss client a free option to buy up
Brushy Mountain Mining Company's ore reserves are being depleted, so its sales are falling. Also, its pit is getting deeper each year, so its costs are rising. As a result, the company's earnings and dividends are declining at the constant rate of 5% per year. I
Atlas Realty Company is interested in buying a house and renting it out for $12,000 a year, collecting the rent in advance each year. This will depreciate the house over 25 years; however sell it after 15 years at twice its purchase price. The maintenance expenditures
The variance of a portfolio of 40 stocks will be the addition of _______ variance terms and _______ covariance terms. A) 40; 1560B) 40; 1600C) 80; 40D) 1600; 40
18,76,764
1948113 Asked
3,689
Active Tutors
1425523
Questions Answered
Start Excelling in your courses, Ask an Expert and get answers for your homework and assignments!!