A company retains 50%of its earnings for capital investment project and the firm is expected to divest itself of unrelated divisions. As a result of the divestment, the return on equity is expected to increase from 20% to 30%. So, what is the growth rate a
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- If future earnings are expected to be higher than current earnings (that is, growth in earnings is expected), the P/E will be low. （ ）
- Which of the following statements about return objectives is TRUE A: To achieve the capital appreciation objective, the nominal rate of return must exceed the rate of inflation. B: The total return objective considers returns from both capital gains and current income, net of expected inflation. C: The current income objective is usually appropriate when an investor requires the purchasing power of the initial investment to increase over time.
- The main content of the financial feasibility analysis includes () A: requirements of start-up capital B: profit forecast C: expected rate of return on investment D: all of the above
- A company is considering entering into a joint venture that will require an investment of $30 million. The project is expected to generate cash flows of $7 million, $14 million, and $15 million in each of the next three years, respectively. Assuming a discount rate of 7%, what is the project"s NPV A: -$5343200 B: -$3702900 C: +$1563400
- Company A is considering making a bid for 100% of Company B’s equity capital. Company B has a P/E ratio of 14 and earnings of $500m. It is expected that $150m in synergy savings will be made as a result of the takeover and the P/E ratio of the combined com