Finance Answers

The equity shares of a firm in the current stock market has been traded at Rs60 per share. The price earnings ratio is 10 times. The Dividend payout ratio is 75%. The total number of shares issued and outstanding as on date are 100000 equity shares of Rs10 each. Book value of each share is Rs40 Describe and Compute - Earnings per share, return on equity.

High-End Set

Economical Set

W/D Combo

Total

Sales

$4,700.000

$4,060,000

$880,000

$9,640,000

Labour

$(1,250,000)

$(1,015,000)

$(235,000)

$(2,500,000)

Materials

$(1,885,000)

$(1,220,000)

$(315,000)

$(3,420,000)

Direct Fixed Costs

$(325,000)

$(220,000)

$(250,000)

$(795,000)

Allocated Fixed costs

$(650,000)

$(650,000)

$(650,000)

$(1,950,000)

Net Income

$590,000

$955,000

$(570,000)

$975,000

You are to perform an analysis to determine whether to drop or keep the ash dryer combination product and present your findings, including the steps taken to make your determination. You are also asked to evaluate if the costing methodology is appropriate and if not, recommend the alternative methods

The comparable company has a beta at 1.2 with D/A ratio being 0.2. D/A ratio of the target company is 0.5. Marginal tax rate is 40%. Rf is 8%. Expected market return is 20%. What is the cost of equity for the target company?

A company pays following dividends: D1 (dividend in year 1/next year) is $7, D2(dividend in year 2) is $8, D3(dividend in year 3) is $12.38. Thereafter, the dividend will grow at a constant rate. SupposeROE will be 20% with dividend and EPS will being $12.75 and $15 in year 4 respectively. The required rate of return is 10%, use 2-stage DDM to estimate the intrinsic value of stock at the current year.

The comparable company has a beta at 1.2 with D/A ratio being 0.2. D/A ratio of the target company is 0.5. Marginal tax rate is 40%. Rf is 8%. Expected market return is 20%. What is the cost of equity for the target company?

Using diagrams and examples, compare and contrast the Classical economists’ Quantity Theory and the 

Keynesian’s Liquidity Preference Theory of money demand.

Using diagrams and examples, compare and contrast the Classical economists’ Quantity Theory and the 

Keynesian’s Liquidity Preference Theory of money demand.