pristine urban tech zither inc
Question 1
In chapter 9 of the textbook you learned about constant dividend model for valuation of a companyâ€s stock. However, in certain industries many companies do not pay dividend.
1 Discuss in which industries most companies do not pay dividend and why?
2 Which factors do you consider in order to value the stock of a company that does not pay dividend and how would you value the stock?
3 Select two publicly traded companies from two different industries and discuss how you would value the stock of those companies. Are your selected stocks overpriced or underpriced by the market?
Provide your explanations and definitions in detail and be precise. Comment on your findings. Provide references for content when necessary. Provide your work in detail and explain in your own words. Support your statements with two peer-reviewed in-text citation(s) and reference(s).
Answer should be minimum 450 words
Question 2
Pick two of the major stock indices; explain what type of companies they represent and discuss what could be the purpose of monitoring those indices. Now, select a publicly traded company and imagine you were to invest in the shares of common stock of that company. How would you evaluate the risk of your investment? Which one of the stock indices do you use to evaluate your investment risk?
Provide your work in detail and explain in your own words. Support your statements with two peer-reviewed in-text citation(s) and reference(s).
Answer should be minimum 450 words
Question 3
You have been hired as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ), manufacturers of fine zithers. The market for zithers is growing quickly. The company bought some land three years ago for $2.1 million in anticipation of using it as a toxic waste dump site but has recently hired another company to handle all toxic materials. Based on a recent appraisal, the company believes it could sell the land for $2.3 million on an after-tax basis. In four years, the land could be sold for $2.4 million after taxes. The company also hired a marketing firm to analyze the zither market, at a cost of $125,000. An excerpt of the marketing report is as follows:
The zither industry will have a rapid expansion in the next four years. With the brand name recognition that PUTZ brings to bear, we feel that the company will be able to sell 3,600, 4,300, 5,200, and 3,900 units each year for the next four years, respectively. Again, capitalizing on the name recognition of PUTZ, we feel that a premium price of $750 can be charged for each zither. Because zithers appear to be a fad, we feel at the end of the four-year period, sales should be discontinued. PUTZ believes that fixed costs for the project will be $415,000 per year, and variable costs are 15 percent of sales. The equipment necessary for production will cost $3.5 million and will be depreciated according to a three-year MACRS schedule. At the end of the project, the equipment can be scrapped for $350,000. Net working capital of $125,000 will be required immediately. PUTZ has a 38 percent tax rate, and the required return on the project is 13 percent. What is the NPV of the project?
Provide your explanations and definitions in detail and be precise. Comment on your findings. Provide references for content when necessary. Provide your work in detail and explain in your own words. Support your statements with minimum five peer-reviewed in-text citation(s) and reference(s).
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