Question

In: Accounting

Lara, a 40-year old financial analyst and mother of two teenage children considers herself as a...

Lara, a 40-year old financial analyst and mother of two teenage children considers herself as a savvy investor. She has increased her investment portfolio considerably over the past five years. Although she has been fairly conservative with her investments, she now feels mor confident in her investment knowledge and would like to branch out into some new areas that could bring higher returns. She has between RM50,000 to RM100,000 to invest. She was considering an investment in 5000 shares of high-technology common stock in ACE market, currently is selling at RM6.55/share. After a discussion with her friend who is an economist with a major commercial bank, Lara believes that the long-running bull market due to cool off and thar economic activity will slow down. She analyses this stock has 10 million shares outstanding and the last year’s earnings per share was RM1.53. The firm’s stockholder equity is RM12 million and the total amount of dividend declared is RM750,000. The company sales of RM12 million and net profit margin of 6% with retention rate (dividend payout ratio) of 40%. Current net profit after taxes shows an increment of 20% from the last year. The growth rate of the dividend of the stock is 7% and the required rate of return is 15%. Required:

a. Compute the price earnings ratio. From the answer, what the indication of the firm?

b. How much the net income after tax of this stock in last year?

c. What is the ROE of the stock? Is the ROE gives you a good indication of this stock?

d. Compute the intrinsic value of the stock today.

e. What is your opinion of this stock and will you proceed to invest in this stock?

Solutions

Expert Solution

Hence, the company provide a positive return. So, lara can proceed to invest in stock


Related Solutions

The history describes your patient as a 38-year-old married woman, the mother of two children in...
The history describes your patient as a 38-year-old married woman, the mother of two children in the sixth and eighth grades. She works full-time as a paralegal professional. Her past medical history is listed as a tonsillectomy at age 8 years and a urinary tract infection at age 14 years (none since then). She has sought healthcare at this clinic for the last 2 years and had a comprehensive assessment when she entered the system. Her husband says that she...
A 35-year-old mother of two grade school-aged children who is in the midst of a contentious...
A 35-year-old mother of two grade school-aged children who is in the midst of a contentious divorce presents to the clinic where you work. She tells you that yesterday when she got home from work, she was bending over to put laundry in the washer and she suddenly felt her “heart racing, pounding” in her chest. She also tells you that her skin was cool and clammy. She rested and eventually her symptoms resolved. a. Describe the possible causes of...
Financial Analysis: John Fisher a married, 40-year-old business owner with two children (ages 16 and 10)...
Financial Analysis: John Fisher a married, 40-year-old business owner with two children (ages 16 and 10) comes to you with $1,000 a month to invest. This money is in excess of his contribution to his company pension plan. A. Discuss the steps you would follow in advising John in setting up his retirement strategy. B. Discuss the strategy you would use in choosing insurance and investment products for John and the products you would select assuming John’s risk tolerance to...
A 32-year-old single mother of two school-age children was involved in a motor vehicle accident and...
A 32-year-old single mother of two school-age children was involved in a motor vehicle accident and sustained an incomplete spinal cord injury at the L2 level. She has weakness (strength 2/5) and decreased tone in the right lower extremity. She has paralysis and flaccidity in the left lower extremity. She is in her room crying and saying that she will never walk again or be able to care for her children. How should the nurse respond?
A 30-year-old mother with two children visits the health care center with her 8-month-old infant, who...
A 30-year-old mother with two children visits the health care center with her 8-month-old infant, who has a slight fever. Upon assessment, the woman tells the nurse that she had given her infant a very small portion of medication that was prescribed for her 4-year-old son some days back when he had a fever. What was the woman’s mistake? What additional information should the nurse give the woman about drug usage and children?
Kathy is a thirty-two year old, stay-at-home mother of three children aged 4, 2, and six...
Kathy is a thirty-two year old, stay-at-home mother of three children aged 4, 2, and six months. The family doesn't have much extra money each month. Kathy has no life insurance coverage, but she feels she should buy a policy to cover her life in case something happens to her and her husband would need to provide care for the children.  Her husband does not think it is necessary.   What kind of life insurance policy would you suggest would be best...
Kathy is a thirty-two-year old, stay-at-home mother of three children aged 4, 2, and six months....
Kathy is a thirty-two-year old, stay-at-home mother of three children aged 4, 2, and six months. The family doesn't have much extra money each month. Kathy has no life insurance coverage, but she feels she should buy a policy to cover her life in case something happens to her and her husband would need to provide care for the children. Her husband does not think it is necessary. (10 points) What kind of life insurance policy would you suggest would...
Case Study B: Ms. J. is a 30-year-old healthy single mother with two children. She has...
Case Study B: Ms. J. is a 30-year-old healthy single mother with two children. She has worked as a paramedic in her community for 6 years. She and her partner responded to a call involving a man who had been drinking heavily at a family party and who was partially conscious. When she and her partner attempted to transfer the 100-kg man to a stretcher, the man grabbed her neck, causing her severe pain. Ms. J.’s doctor diagnosed a spinal...
Case Study Identifying Factors: Carmen Matthews is a 41-year-old separated Hispanic mother of two children, ages...
Case Study Identifying Factors: Carmen Matthews is a 41-year-old separated Hispanic mother of two children, ages 10 and 12. She works full-time as a real estate agent. She is referred by her counselor. Chief Complaint: “I am so worried all the time. I feel like I’m caught in a nightmare.” History of Present Illness: The patient reports increased anxiety since her husband abruptly left town with his secretary about 8 months ago. She complains of constant worrying about paying her...
Case Study: You are a nurse caring for a 26 year-old mother of three children who...
Case Study: You are a nurse caring for a 26 year-old mother of three children who presents to the physician's office with tachypnea, productive cough of yellow sputum, hyperthermia, malaise, fatigue and insufficient fluid intake. You obtain the following information during your objective assessment: Vital signs are BP- 120/78, HR- 110, respirations 24/minute, temperature 100.4 orally and pulse oximeter of 90% on room air (RA). Upon auscultation, you note coarse rhonchi in bilateral posterior lobes. She complaints of pain of...
ADVERTISEMENT
ADVERTISEMENT
ADVERTISEMENT