Ask Question, Ask an Expert

+1-415-315-9853

info@mywordsolution.com

Ask Basic Finance Expert

Metatrend's stock will generate earnings of $6 per share this year. The discount rate for the stock is 15%. and the rate of return on reinvested earning also is 5%.

a. Find both the growth rate of dividends and the price of the stock if the company reinvests the following fraction of its earnings in the firm:(i) 0%; (ii) 40%, (iii) 60%

b. Redo part (a) now assuming that the rate of return on reinvested earnings is 20%. what is the present value of growth opportunities for each reinvestment rate?

c. Considering your answers to parts (a) and (b). can you briefly state the difference between companies experiencing growth versus companies with growth opportunities.

 

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M927853

Have any Question? 


Related Questions in Basic Finance

There are basically 5 categories of financial statement

There are basically 5 categories of financial statement analysis that is employed to assess the health of companies related to their financial performance. They are generally classified as liquidity, efficiency, debt, pr ...

Suppose the lease on a certain space will expire at the

Suppose the lease on a certain space will expire at the beginning of 2010. You believe that the probability of the existing tenant renewing is 75 percent. If they renew, you will need to spend only an estimated $5.00/SF ...

1 depreciation expense is located on thea balance sheetb

1. Depreciation expense is located on the A. balance sheet. B. income statement. C. the accounts receivable documention. D. the accounts payable documentation. 2. Joe Sullivan invests $9,000 at the end of each year for 2 ...

1 discuss the risks or benefits to the exporter and

1. Discuss the risks or benefits to the exporter and important contrasting accounts receivable financing and factoring. 2. Discuss the role of the factor for the exporter. How does the factor help an exporter? 3. Contras ...

1 compare the assessment of face content and construct

1. Compare the assessment of face, content, and construct validity. Which of the three approaches is most objective, and why? Is it possible to have a measure that is construct valid but not face valid? 2. What is the im ...

Explain debt-equity swaps and how they increase activity in

Explain debt-equity swaps and how they increase activity in the secondary loan market? List additional factors that deserve consideration in a foreign project analysis but are not relevant for a purely domestic project.

1 generate three examples of nominal variables and three

1. Generate three examples of nominal variables and three examples of quantitative variables that were not mentioned in the chapter. 2. On a piece of paper make two columns. In one column list all of the advantages of fr ...

All of us have a tendency to categorize people into

All of us have a tendency to categorize people into stereotypic groups. If you look around at the students on campus, you will see science geeks, artsy freaks, jocks, wallflowers, cheerleaders, and party animals, just to ...

Now consider a second joint of the same material width and

Now consider a second joint of the same material, width and thickness as the joint in problem 4 above but eccentrically loaded. This time, however, the line of action of the external load is 0.563 in. removed from the ce ...

1 distinguish between the operations of a mortgage banker

1. Distinguish between the operations of a mortgage banker and a mortgage broker. What are the five major minimum standards that an independent mortgage broker or loan office must pass to be licensed with the NMLS? 2. Wh ...

  • 4,153,160 Questions Asked
  • 13,132 Experts
  • 2,558,936 Questions Answered

Ask Experts for help!!

Looking for Assignment Help?

Start excelling in your Courses, Get help with Assignment

Write us your full requirement for evaluation and you will receive response within 20 minutes turnaround time.

Ask Now Help with Problems, Get a Best Answer

WalMart Identification of theory and critical discussion

Drawing on the prescribed text and/or relevant academic literature, produce a paper which discusses the nature of group

Section onea in an atwood machine suppose two objects of

SECTION ONE (a) In an Atwood Machine, suppose two objects of unequal mass are hung vertically over a frictionless

Part 1you work in hr for a company that operates a factory

Part 1: You work in HR for a company that operates a factory manufacturing fiberglass. There are several hundred empl

Details on advanced accounting paperthis paper is intended

DETAILS ON ADVANCED ACCOUNTING PAPER This paper is intended for students to apply the theoretical knowledge around ac

Create a provider database and related reports and queries

Create a provider database and related reports and queries to capture contact information for potential PC component pro