Problem 8-13 Stock Valuation and PS [LO2] Z Space, Incorporated, is a new company and currently has negative earnings. The company's sales are $2.6 million and there are 142,000 shares outstanding. a. If the benchmark price-sales ratio is 6.2, what is your estimate of an appropriate stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What if the price-sales ratio were 5.5? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Stock price at a price-sales of 6.2 b. Stock price at a price-sales of 5.5

Problem 8-13 Stock Valuation and PS [LO2] Z Space, Incorporated, is a new company and currently has negative earnings. The company's sales are $2.6 million and there are 142,000 shares outstanding. a. If the benchmark price-sales ratio is 6.2, what is your estimate of an appropriate stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What if the price-sales ratio were 5.5? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. Stock price at a price-sales of 6.2 b. Stock price at a price-sales of 5.5

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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[27] Choose the correct answer w/ explanation. JFINEX Corporation has been on a downturn for the past four years with a negative balance in retained earnings. However, the stock price is PhP 5 per share. Which of the following is most correct? The accountants must have made a mistake The required rate of return will be small Stockholders believe the stock is worth PhP 5 because future free cash flows are expected to be positive Investors are irrational to invest PhP 5 when EPS have been negative for the past four years
ABC justpaid a dividend of D0 = $4. Analysts expect the company’s dividend to grow by33% this year, by 28% in Year 2, and at a constant rate of 6% in Year 3 andthereafter. The required return on this stock is 17%. What is the best estimateof the stockâ€™s current market value?Note: Enter your answer rounded off to two decimal points.Do not enter $ or comma in the answer box. For example, if your answer is$12.345 then enter as 12.35 in the answer box.
6. Corporation A traded at a P/B (price-to-book) ratio of 0.5. Its most recent reported ROCE is 10% and its cost of equity is also about 10%. Which of the following is most likely to be true?A. On average, the market expects future ROCEs to increase to above 10%;B. On average, the market expects future ROCEs to decrease to below 10%;C. On average, the market expects future ROCEs to maintain at 10%;D On average, the market does not know what to expect.
Fleur Corp.'s common stock currently sells for $49 per share. The dividend one year from now is expected to be $3.1, and the expected growth rate in dividends per year is 8%. The cost of common equity, RE, is ____%. Do not round any intermediate work, but round your final answer to 2 decimal places (example: enter 12.34 for 12.34%). Do not enter the % sign.
INV 1 3a Your analysis has indicated that the shares of Levi’s Riveting Co. are highly over-valued. To take advantage of this expectation, you decide to sell short 900 shares at $20 each. The initial margin for short sales in your brokerage account is set at 60% (i.e., 160% of the value of the short sale). The minimum margin requirement is 40%. The stock will pay no dividends during the period, and you will not remove any money from the account before making the offsetting transaction. At what price would you face a margin call?
H4 You sell short 18 shares of Wells Fargo &Co that are currently selling at $54 per share. You post the 0.56 margin required on the short sale. If your broker requires a 0.37 maintenance margin (MMR), at what stock price will you get a margin call? (You earn no interest on the funds in your margin account, and the firm does not pay any dividends.)
Indicate whether each of the following statements is true or false1) Point-and-figure charts attempt to identify reversals in the direction of stock prices over time. 2) Some technical analysts would short sell when the support level is broken and buy back once another lower support level is established. 3) High dividend yields are typical of rapidly growing companies. 4) If 50 day moving average is lower than the 200 day moving average on a particular day, this indicates a bearish signal. 5) Changes in stock prices tend to lag changes in level of economic activity by several months. 6) Most technical analysts view a falling advance-decline line in a rising market as bearish. 7) The free cash flow to equity will always be higher than the net income of the firm, because depreciation is added back. 8) Sell stop orders accelerate a bear market 9) For technical analysts, an increase in the volume of short selling by specialists is a bearish signal. 10) Susan is expecting the economy to…
11 The following problem refers to the stock table for Kired, inc ( a computer company) given below . use the stock table to answer the following questions. Where necessary, round the dollar amounts to the nearest cent. A. what were the high and low prices for a share for the past 52 weeks? High price = Low price= B. if you owned 700 shares of this stock last week, what dividend did you receive? $_____ c. what is the annual return for the dividens alone? How does this compared to a bank offering a 3% interest rate? ___% d. how many shares of this company‘s stock were straight it yesterday? ____ shares E.What where are the high and low prices for a share yesterday? High price=___ Low price=____ f. what was the price at which is share traded when the stock exchange close yesterday? $_____ g. what was the change in price for a share of stock from the market close to two days ago to yesterday market close? -$____ H. compute the companies animal earnings per share using:…
Mf2. 1. Consider the data in the following table for a hypothetical two-stock version of the Dow Jones Industrial Average. a) Calculate the percentage change in the index value. b) Suppose firm XYZ from part (a) were to split two for one during the period (price drops to $35 immediately after the split and the new final price is $30). Calculate the percentage change in the index value. c) If this was for S&P500-type index, what is the percentage change in the index value? Is it affected by the stock split of firm XYZ?
The Perfect Rose Co. has earnings of $2.10 per share. The benchmark PE for the company is 10. a. What stock price would you consider appropriate? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What if the benchmark PE were 13? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) stock price for pe of 10 stock price for pe of 13
Problem 8-22 Expected Return (LG8-5) Paychex Inc. (PAYX) recently paid a dividend of $0.78. The dividend is expected to grow at a 15 percent rate. The current stock price is $46.11.What is the return shareholders are expecting

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