Assume that the average firm in your company's industry is expected to grow at a constant rate of 5 percent, and its dividend yield is 4 percent. Your company is about as risky as the average firm in the industry, but it has just developed a line of innovative new products which leads you to expect that its earnings and dividends will grow at a rate of 40 percent [ = D0(1 + g) = D0(1.40)] this
year and 25 percent the following year, after which growth should match the 5 percent industry average rate. The last dividend paid (D0) was $2 . What is the value per share of your firm's stock?
a. $42.60
b. $82.84
c. $91.88
d. $101.15
e. $110.37
b
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Assume the following sales data for a company: Current year $1,025,000 Preceding year 820,000 What is the percentage increase in sales from the preceding year to the current year?
a. 100% b. 25% c. 125% d. 75%
If net income is $250,000 and interest expense is $30,000 for Year 2, what are the earnings per share on common stock for Year 2?
a. $4.16 b. $4.32 c. $4.02 d. $2.49
Inflated currencies tend to weaken.
Answer the following statement true (T) or false (F)
Fixed costs are never relevant
Indicate whether the statement is true or false