A company has no debt.Its revenue last year was 5,000,000 and operating costs 3,000,000.

Profits tax is 20% and there is no deprecation allowance.

The company began with a book value of 10,000,000.

Calculate ROE and perform the DuPont analysis (there are, of course, only two factors here).When calculating profit margin, do after-tax.

Pretax profits = 5MM - 3MM = 2MM After tax profits are 2MM x.2 = $400,000 therefore 2MM - 400k = 1.6MM

After Tax PM = AT Profits / Revenue = 1.6MM / 5MM = .32

ROE = Net Income / Shareholders Equity = 1.6 / 10MM = 16%

Dupont= 16% ROE =

PM .32 *

Turnover Ratio (revenue/ liabilities) or sales / total assets 5MM/ 10MM = .5*

Leverage % (Assets /equity) or 10MM/10MM = 1

Dupont = 16% = .32 *.5 * 1

Using the information above information solve this question.

The company has 400,000 shares outstanding.

Assuming there are no retained earnings, what were eps and dividend-per-share?

It is January 1 2021. Investors expect this dividend to continue indefinitely. If the discount factor they use in valuing the company's stocks is 12%, what is the stock price?

What is the ratio of market value to book value?