Solved

You Are Responsible for Valuing QXR Corporation,given the Following Data

Question 58

Essay

You are responsible for valuing QXR Corporation,given the following data: current EPS = $4.00; current payout ratio = 40%,ROA = 20%; beta = 1.2; debt/equity ratio = 0.75; interest rate on debt = 12%; annualized 6-month T-bill rate = 8%; number of shares outstanding = 100,000.You expect the firm to grow at 8% after the first five years,with the ROA declining to 15%.You also know that QXR has substantial real estate holdings that are currently unutilized and can be sold for $1,000,000.What is your estimate of QXR's intrinsic value? Assume a market rate of return of 15%.

Correct Answer:

verifed

Verified

Cost of equity = blured image = 16.4%
ROE for first ...

View Answer

Unlock this answer now
Get Access to more Verified Answers free of charge

Related Questions

Unlock this Answer For Free Now!

View this answer and more for free by performing one of the following actions

qr-code

Scan the QR code to install the App and get 2 free unlocks

upload documents

Unlock quizzes for free by uploading documents