Problem 18-17 The Duo Growth Company just paid a dividend of $1.00 per share. The dividend is expected to grow at a rate of 30% per year for the next three years and then to level off to 5% per year forever. You think the appropriate market capitalization rate is 25% per year. a. What is your estimate of the intrinsic value of a share of the stock

Select the correct answer. joshua runs a large manufacturing business that is listed on the stock exchange. his company made good profits in the previous financial year. he now plans to reward his shareholders with handsome dividends. under which category of activities in the cash flow statement would the company’s accountants place this outflow of cash? a. investing activities b. operating activities c. financing activities d. non-operating activities

Examine the following book-value balance sheet for university products inc. the preferred stock currently sells for $30 per share and pays a dividend of $3 a share. the common stock sells for $16 per share and has a beta of 0.9. there are 2 million common shares outstanding. the market risk premium is 9%, the risk-free rate is 5%, and the firm’s tax rate is 40%. book-value balance sheet (figures in $ millions) assets liabilities and net worth cash and short-term securities $ 2.0 bonds, coupon = 6%, paid annually (maturity = 10 years, current yield to maturity = 8%) $ 5.0 accounts receivable 3.0 preferred stock (par value $15 per share) 3.0 inventories 7.0 common stock (par value $0.20) 0.4 plant and equipment 21.0 additional paid-in stockholders’ equity 13.6 retained earnings 11.0 total $ 33.0 total $ 33.0 a. what is the market debt-to-value ratio of the firm? (do not round intermediate calculations. enter your answer as a percent rounded to 2 decimal places.) b. what is university’s wacc? (do not round intermediate calculations. enter your answer as a percent rounded to 2 decimal places.)

Suppose a holiday inn hotel has annual fixed costs applicable to its rooms of $1.2 million for its 300-room hotel, average daily room rents of $50, and average variable costs of $10 for each room rented. it operates 365 days per year. the amount of operating income on rooms, assuming an occupancy* rate of 80% for the year, that will be generated for the entire year is *occupancy = % of rooms rented