1. (10 pts) In 2012 Whole Foods had sales of S74 billion and a net income of $17
ID: 2751300 • Letter: 1
Question
1. (10 pts) In 2012 Whole Foods had sales of S74 billion and a net income of $17 billion, and its year- end total assets were S121.31 billion. The firm's total- debt-to-total-assets ratio was 45.3%. Based on the DuPont equation, what was the Whole Foods'ROE in 2012? 10 pts show all work ROE 25.62% 2. (10 pts) Whole Foods currently has 21 long-term bond issues outstanding with various times-to- maturity and coupon rates. One of these bonds matures on June 1, 2039, approximately 25 years from today. It pays a coupon rate of5.20% (for simplicity, assume that coupons are paid annually). The bond is currently selling for si,153.06, based on a face value of $1,000. Which of estimates of yield-to-maturity below is closest to that on this instrument? 10 pts show all work YTM 4.20% 3. pts) Whole Foods' current dividend per share is S1.07. You expect dividends to grow at 5% per year into perpetuity. Whole Foods' beta is 0.85. The current riskfree rate is 2.9%, and the expected return on the market portfolio is 7.4%. Use the CAPM to estimate Whole Foods' required return on equity. Then, using a perpetuity formula to project Whole Foods' current dividend per share into the infinite future, and discounting at the cost of equity, what is the intrinsic (expected) value of the firm based on the projected dividends: 10pts. Show all work. Intrinsic value S65.13 Courses Calendar Todo Notifications MessagesExplanation / Answer
Answer: (1)
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DuPont analysis ROE = (Profit/Sales)*(Sales/Assets)*(Assets/Equity) ROE = (17/74)*(74/121.31)*(121.31/66.35657) ROE = 25.62%Related Questions
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