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Agarwal Technologies was founded 10 years ago. It has been profitable for the last 5 years, but it has needed all of its earnings to support growth and thus has never paid a dividend. Management has indicated that it plans to pay a $0.25 dividend 3 years from today, then to increase it at a relatively rapid rate for 2 years, and then to increase it at a constant rate of 8.00% thereafter. Management’s forecast of the future dividend stream, along with the forecasted growth rates, is shown below. Assuming a required return of 11.00%, what is your estimate of the stock’s current value? Use the dividend values provided in the table below for your calculations. Do not round your intermediate calculations.

Year 0 1 2 3 4 5 6
Growth rate NA NA NA NA 90.00% 40.00% 8.00%
Dividends $0.0000 $0.0000 $0.0000 $0.2500 $0.4750 $0.6650 $0.7182
a. $13.69
b. $14.05
c. $15.48
d. $15.10
e. $16.76

The Francis Company is expected to pay a dividend of D1 = $2.25 per share at the end of the year, and that dividend is expected to grow at a constant rate of 6.00% per year in the future. The company’s beta is 1.40, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the company’s current stock price? Do not round intermediate calculations.

a. $50.74
b. $90.00
c. $21.03
d. $47.87
e. $37.50
 
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When Elon Musk’s firm was estimating the expected NPV from providing customers with space travel, the financial analyst assumed the revenue in year 1 of operations would equal $1.2 billion. Given all of her other assumptions, the expected NPV turned out to equal $13.8 billion and, therefore, the CFO was planning to recommend the investment. Before a final decision was made, a senior financial analyst applied break even analysis based on the forecasted revenue in year 1 and it turned out that if revenue in year 1 dropped from $1.2 billion to 1.0 billion, the investment would break even (NPV = $0). If you were senior financial analyst, how would you interpret the results of your break even analysisand, in your opinion, how would the results impact the recommendation to invest?
 
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Taco Quatro can make their entire menu out of their fantastic four Mexican ingredients, cheese, meat, beans and tortillas. A Nacholupa needs 2 ounces of cheese, 4 ounces of beans and 3 tortillas. A Quesatilla needs 4 ounces of cheese, 2 ounces of meat and 1 tortilla. An Enchinacho requires 2 ounces each of cheese, meat, and beans plus 3 tortillas. Their newest menu item, the Burritacg needs 4 ounces of cheese, 2 ounces of meat and one tortilla. A Nacholupa sells for $2.75, a Quesatilla sells for $2, an Enchinacho sells for $3 and the new Burritace sells for $4. The assistant manager checks the cooler one fine Monday morning and sees that they have 400 ounces of cheese, 150 ounces of meat, 400 ounces of beans and 250 tortillas on hand. a. Formulate a linear programming model for this problem b. Solve the model by using the computer.
 
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Martha, as a home-service medical care volunteer, has cared for George through the final weeks
of his fatal illness. Just before he died, George told Martha where a large sum of money he had
accumulated was stored. He asked her to see that the money was given to the Society for Protection
against Alien Control of the Earth (SPACE). Since George’s illness did not affect his mental
capacity, she agreed. But now that he has died, she is considering using the money to support the
activities of the local Hunger Task Force, an organization that provides donated food to those who
need it. George has no surviving friends or relatives, and no one else knows about the money. He
left no written will.
i) What will you do in this situation if you were Martha?
ii) Describe your argument in the light of an ethical theories that we covered in our course.
Which ethical theory did you choose?
iii) Explain your choice of ethical theories with contrast to other ethical theories with
respect to the given situation.
 
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