1) Simpkins Corporation does not pay any dividends because it is expanding rapid
ID: 2617811 • Letter: 1
Question
1) Simpkins Corporation does not pay any dividends because it is expanding rapidly and needs to retain all of its earnings. However, investors expect Simpkins to begin paying dividends, with the first dividend of $2.00 coming 3 years from today. The dividend should grow rapidly - at a rate of 60% per year - during Years 4 and 5. After Year 5, the company should grow at a constant rate of 9% per year. If the required return on the stock is 16%, what is the value of the stock today (assume the market is in equilibrium with the required return equal to the expected return)? Round your answer to the nearest cent. Do not round your intermediate computations.
$............
2) Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 6% rate. Dozier's weighted average cost of capital is WACC = 17%.
What is Dozier's horizon value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.) Round your answer to two decimal places. Enter your answer in millions of dollars.
$ ...... million
What is the current value of operations for Dozier? Round your answer to two decimal places. Round intermediate calculations to two decimal places. Enter your answer in millions of dollars.
$ ...... million
Suppose Dozier has $10 million in marketable securities, $100 million in debt, and 10 million shares of stock. What is the intrinsic price per share? Round your answer to the nearest cent. Round intermediate calculations to two decimal places.
$ ......
2) Dozier Corporation is a fast-growing supplier of office products. Analysts project the following free cash flows (FCFs) during the next 3 years, after which FCF is expected to grow at a constant 6% rate. Dozier's weighted average cost of capital is WACC = 17%.
Year 1 2 3 Free cash flow ($ millions) -$20 $30 $40What is Dozier's horizon value? (Hint: Find the value of all free cash flows beyond Year 3 discounted back to Year 3.) Round your answer to two decimal places. Enter your answer in millions of dollars.
$ ...... million
What is the current value of operations for Dozier? Round your answer to two decimal places. Round intermediate calculations to two decimal places. Enter your answer in millions of dollars.
$ ...... million
Suppose Dozier has $10 million in marketable securities, $100 million in debt, and 10 million shares of stock. What is the intrinsic price per share? Round your answer to the nearest cent. Round intermediate calculations to two decimal places.
$ ......
Explanation / Answer
1)
what is the value of the stock today
=2/(1+16%)^3+(2*(1+60%)^1)/(1+16%)^4+(2*(1+60%)^2)/(1+16%)^5+((2*(1+60%)^2*(1+9%))/(16%-9%))/(1+16%)^5
=43.44
The above should be answer....
we do only one question based on Chegg rule.
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