Entries by Hannah Wangui

Justin Cement Company

Question 8)Justin Cement Company has had the following pattern of earnings per share over the last five years:       YearEarningsPer Share  2006$9.00   2007 9.54   2008 10.11   2009 10.72   2010 11.32     The earnings per share have grown at a constant rate (on a rounded basis) and will continue to do so in the future. Dividends represent 40 percent of earnings.     a.Project earnings and dividends for the next year (2011). (Round the […]

 

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BioScience Inc.

Question 7)BioScience Inc. will pay a common stock dividend of $7.20 at the end of the year (D1). The required return on common stock (Ke) is 20 percent. The firm has a constant growth rate (g) of 8 percent.Compute the current price of the stock (P0). (Do not round intermediate calculations. Round your answer to 2 […]

 

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the bonds of Olsen’s Clothing Stores

Question 6)You are called in as a financial analyst to appraise the bonds of Olsen’s Clothing Stores. The $1,000 par value bonds have a quoted annual interest rate of 8 percent, which is paid semiannually. The yield to maturity on the bonds is 10 percent annual interest. There are 20 years to maturity. Use Appendix B andAppendix […]

 

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Northwest Utility Company faces increasing needs for capital

Question 23)Northwest Utility Company faces increasing needs for capital. Fortunately, it has an Aa3 credit rating. The corporate tax rate is 35 percent. Northwest’s treasurer is trying to determine the corporation’s current weighted average cost of capital in order to assess the profitability of capital budgeting projects.        Historically, the corporation’s earnings and dividends per share have […]

 

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