![Computers and Technology](/tpl/images/cats/informatica.png)
Computers and Technology, 04.11.2019 23:31, milkshakegrande101
Chiptech, inc., is an established computer chip firm with several profitable existing products as well as some promising new products in development. the company earned $1.4 a share last year, and just paid out a dividend of $0.63 per share. investors believe the company plans to maintain its dividend payout ratio at 45%. roe equals 24%. everyone in the market expects this situation to persist indefinitely.
a. what is the market price of chiptech stock? the required return for the computer chip industry is 15%, and the company has just gone ex-dividend (i. e., the next dividend will be paid a year from now, at t = 1).
b. suppose you discover that chiptech’s competitor has developed a new chip that will eliminate chiptech’s current technological advantage in this market. this new product, which will be ready to come to the market in 2 years, will force chiptech to reduce the prices of its chips to remain competitive. this will decrease roe to 15%, and, because of falling demand for its product, chiptech will decrease the plowback ratio to 0.4. the plowback ratio will be decreased at the end of the second year, at t = 2: the annual year-end dividend for the second year (paid at t = 2) will be 55% of that year’s earnings. what is your estimate of chiptech’s intrinsic value per share? ( hint: carefully prepare a table of chiptech’s earnings and dividends for each of the next 3 years. pay close attention to the change in the payout ratio in t = 2.)
![answer](/tpl/images/cats/otvet.png)
Answers: 1
Similar questions
![Предмет](/tpl/images/cats/en.png)
English, 04.07.2019 22:30, mamatonya5p5jl11
Answers: 1
![Предмет](/tpl/images/cats/ekonomika.png)
Business, 17.08.2019 17:20, mommy4life678
Answers: 1
![Предмет](/tpl/images/cats/ekonomika.png)
Business, 23.09.2019 10:30, kahmir15
Answers: 1
Do you know the correct answer?
Chiptech, inc., is an established computer chip firm with several profitable existing products as we...
Questions in other subjects:
![Konu](/tpl/images/cats/en.png)
![Konu](/tpl/images/cats/health.png)
Health, 28.08.2019 20:30
![Konu](/tpl/images/cats/istoriya.png)
History, 28.08.2019 20:30
![Konu](/tpl/images/cats/en.png)
![Konu](/tpl/images/cats/en.png)
![Konu](/tpl/images/cats/en.png)
English, 28.08.2019 20:30
![Konu](/tpl/images/cats/mat.png)
Mathematics, 28.08.2019 20:30
![Konu](/tpl/images/cats/obshestvoznanie.png)
Social Studies, 28.08.2019 20:30
![Konu](/tpl/images/cats/en.png)
![Konu](/tpl/images/cats/istoriya.png)
History, 28.08.2019 20:30