Exam 6: Stock Valuation

Webster preferred stock pays an annual dividend of $6.20 a share.What is the maximum price you should pay today to purchase this stock if you desire a rate of return of 14.25 percent?

Hanover Inc.is an all-equity firm with 35,000 shares of stock outstanding.The firm expects sales of $750,000 next year.Sales are expected to grow by 10 percent the following year and then level off to a constant 4 percent growth rate.Net cash flow varies in direct proportion to sales and is currently equal to 17 percent of sales.The required return for this firm is 14 percent.What is the estimated current value of one share of stock?

The voting procedure where a shareholder grants authority to another individual to vote his/her shares is called ________ voting.

Shares of ABT stock offer an expected total return of 14.6 percent.What is the dividend yield if the dividend increases by 2.8 percent annually?

The ELL common stock pays an annual dividend of $2.23 a share and is committed to maintaining a constant dividend.How much are you willing to pay for one share of this stock if your required return is 16 percent?

SK Enterprises has total assets of $421,800,outstanding debt of $129,000,cash of $18,700,sales of $387,400,costs of $241,900,and depreciation of $31,200.The firm has 11,300 shares of stock priced at $34.40 a share.What is the firm's EV to EBITDA ratio?

Shares of ABBO stock are currently selling for $14.43 a share.The last annual dividend paid was $1.61 a share,and dividends increase at a constant rate.If the market rate of return is 14 percent,what is the dividend growth rate?

The EV/EBITDA ratio has an advantage over the PE ratio in situations where comparisons are being made of firms that vary based on their

Midtown Enterprises paid its first annual dividend yesterday in the amount of $.26 a share.The company plans to double each annual dividend payment for the next 3 years.After that,it will pay a constant $2.40 per share dividend indefinitely.What is one share of this stock worth today if the market rate of return on similar securities is 14.5 percent?

An agent who arranges security transactions among investors without maintaining an inventory is called a

Lew,an individual investor,sold 100 shares of Global Tech stock on Monday.Janice,another individual investor,purchased those shares but never met Lew.You know for certain that this trade occurred in which market?

New Tours last annual dividend was $2 a share.The company plans to lower the dividend by $.30 each year for the next 3 years.In Year 5,it will pay a final liquidating dividend of $17 a share.If the required return is 22 percent,what is the current per share value of this stock?

A stock quote shows a last price of 32.13,a P/E of 17,and a net change of −.23.Based on this information,which one of the following statements is correct?

According to finance professionals,which one of these factors has the biggest impact on a firm's PE ratio?

Differential growth refers to the stock of a firm that increases its dividend by

Tyler Industries stock traditionally provides a rate of return of 13.7 percent.The company just paid an annual dividend of $1.21 a share and recently announced it will commence increasing its dividends by 1.6 percent each year.For this stock to return its traditional rate,what should the market price of this stock be?

Dille Inc.pays no dividend at the present time.In Years 2 and 3,the firm will pay annual dividends of $4 a share.After that,it will pay a constant $2 a share dividend indefinitely.What is this stock worth at a required return of 17 percent?

ALP Inc.has decided to issue preferred stock with an annual dividend of $5 a share.Similar stocks are currently yielding 14 percent.What price should the firm expect to receive for each new share issued?

Hanover Inc.is an all-equity firm with 27,500 shares of stock outstanding.The firm expects sales of $429,000 next year.Sales are expected to grow by 30 percent the following year and then level off to a constant 6 percent growth rate.Net cash flow varies in direct proportion to sales and is currently equal to 21 percent of sales.The required return for this firm is 18 percent.What is the estimated current value of one share of stock?

The rate at which a stock's price is expected to appreciate (or depreciate)is called the ________ yield.