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

question 36

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%.

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Definitions:

Net Sales

The revenue from the sale of goods or services after deducting returns, allowances, and discounts.

Accounts Receivable Turnover

A financial metric that measures how often a company collects its average accounts receivable balance within a period.

Accounts Receivable Turnover

A financial metric that measures how efficiently a company collects on its receivables or the speed of their credit sale conversions into cash.

Receivables Collected

The amount of money received from customers in payment of accounts receivable during a given period.