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Benchmark Metrics, Inc. (BMI), an all-equity financed firm, just reported EPS of $5.00

17 / 01 / 2019 Research Papers

This paper circulates around the core theme of Benchmark Metrics, Inc. (BMI), an all-equity financed firm, just reported EPS of $5.00 together with its essential aspects. It has been reviewed and purchased by the majority of students thus, this paper is rated 4.8 out of 5 points by the students. In addition to this, the price of this paper commences from £ 99. To get this paper written from the scratch, order this assignment now. 100% confidential, 100% plagiarism-free.

Benchmark Metrics, Inc. (BMI), an all-equity financed firm, just reported EPS of $5.00 per share for 1 answer below » Benchmark Metrics, Inc. (BMI), an all-equity financed firm, just reported EPS of $5.00 per share for 2008. Despite the economic downturn, BMI is confident regarding its current investment opportunities. But due to the financial crisis, BMI does not wish to fund these investments exter- nally. The Board has therefore decided to suspend its stock repurchase plan and cut its dividend to $1 per share (vs. almost $2 per share in 2007), and retain these funds instead. The firm has just paid the 2008 dividend, and BMI plans to keep View complete question » Benchmark Metrics, Inc. (BMI), an all-equity financed firm, just reported EPS of $5.00 per share for 2008. Despite the economic downturn, BMI is confident regarding its current investment opportunities. But due to the financial crisis, BMI does not wish to fund these investments exter- nally. The Board has therefore decided to suspend its stock repurchase plan and cut its dividend to $1 per share (vs. almost $2 per share in 2007), and retain these funds instead. The firm has just paid the 2008 dividend, and BMI plans to keep its dividend at $1 per share in 2009 as well. In subsequent years, it expects its growth opportunities to slow, and it will still be able to fund its growth internally with a target 40% dividend payout ratio, and reinitiating its stock repurchase plan for a total payout rate of 60%. (All dividends and repurchases occur at the end of each year.) Suppose BMI’s existing operations will continue to generate the current level of earnings per share in the future. Assume further that the return on new investment is 15%, and that reinvestments will account for all future earnings growth (if any). Finally, assume BMI’s equity cost of capital is 10%. Estimate BMI’s EPS in 2009 and 2010 (before any share repurchases). What is the value of a share of BMI at the start of 2009? View less » Sep 17 2015 01:48 PM


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