What is the required rate of return on this stock

Assignment Help Finance Basics
Reference no: EM131018663

QUESTION 1

The common stock of Wetmore Industries is valued at $63.7 a share. The company increases their dividend by 3.8 percent annually and expects their next dividend to be $3. What is the required rate of return on this stock?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 2

ABC's stock has a required rate of return of 17.2%, and it sells for $34 per share. The dividend is expected to grow at a constant rate of 7.2% per year. What is the expected year-end dividend, D1?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 3

ABC Inc., is expected to pay an annual dividend of $2.5 per share next year. The required return is 13.2 percent and the growth rate is 3 percent. What is the expected value of this stock five years from now?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 4

ABC's last dividend was $5.2. The dividend growth rate is expected to be constant at 31% for 3 years, after which dividends are expected to grow at a rate of 5% forever. If the firm's required return (rs) is 14%, what is its current stock price (i.e. solve for Po)?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 5

ABC just paid a dividend of D0 = $4.7. Analysts expect the company's dividend to grow by 31% this year, by 25% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this stock is 16%. What is the best estimate of the stock's current market value?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 6

A stock's next dividend is expected to be $1.2. The required rate of return on stock is 16.7%, and the expected constant growth rate is 2.8%. What is the stock's current price?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 7

A stock just paid a dividend of $0.6. The required rate of return is 18.4%, and the constant growth rate is 6.6%. What is the current stock price?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 8

ABC Company's last dividend was $2.3. The dividend growth rate is expected to be constant at 28% for 2 years, after which dividends are expected to grow at a rate of 5% forever. The firm's required return (rs) is 12%. What is its current stock price (i.e. solve for Po)?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 9

ABC is expected to pay a dividend of $3 per share at the end of the year. The stock sells for $51 per share, and its required rate of return is 12.8%. The dividend is expected to grow at some constant rate, g, forever. What is the growth rate (i.e. solve for g)?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 10

ABC Enterprises' stock is expected to pay a dividend of $1.9 per share. The dividend is projected to increase at a constant rate of 5.2% per year. The required rate of return on the stock is 17.6%. What is the stock's expected price 3 years from today (i.e. solve for P3)?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 11

If D1 = $5.1, g (which is constant) = 2%, and P0 = $26.52, what is the stock's expected dividend yield for the coming year?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 12

If D1 = $6.1, g (which is constant) = 2.9%, and P0 = $76.4, what is the stock's expected total return for the coming year?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 13

ABC Enterprises' stock is currently selling for $68.4 per share. The dividend is projected to increase at a constant rate of 5.8% per year. The required rate of return on the stock is 12%. What is the stock's expected price 5 years from today (i.e. solve for P5)?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 14

ABC's last dividend paid was $2.5, its required return is 19.6%, its growth rate is 3.5%, and its growth rate is expected to be constant in the future. What is Sorenson's expected stock price in 7 years, i.e., what is P7?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 15

A stock is expected to pay a dividend of $1.8 at the end of the year. The required rate of return is rs = 11.7%, and the expected constant growth rate is g = 6.9%. What is the stock's current price?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 16

The common stock of Connor, Inc., is selling for $58 a share and has a dividend yield of 2 percent. What is the dividend amount?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 17

A stock just paid a dividend of D0 = $1.1. The required rate of return is rs = 14.2%, and the constant growth rate is g = 5.6%. What is the current stock price?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 18

If last dividend = $4.3, g = 8.4%, and P0 = $75, what is the stock's expected total return for the coming year?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 19

ABC Industries will pay a dividend of $2 next year on their common stock. The company predicts that the dividend will increase by 7 percent each year indefinitely. What is the dividend yield if the stock is selling for $29 a share?
Enter your answer in percentages rounded off to two decimal points. DO not enter % in the answer box.

QUESTION 20

The 8 percent annual coupon bonds of the ABC Co. are selling for $1,080.69. The bonds mature in 10 years. The bonds have a par value of $1,000. What is the before-tax cost of debt?
Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 21

ABC, Inc., has 819 shares of common stock outstanding at a price of $77 a share. They also have 375 shares of preferred stock outstanding at a price of $93 a share. There are 409, 8 percent bonds outstanding that are priced at $47. The bonds mature in 16 years and pay interest semiannually. What is the capital structure weight of the preferred stock?
Enter your answer as a percentage rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 22

You were hired as a consultant to ABC Company, whose target capital structure is 35% debt, 15% preferred, and 50% common equity. The before-tax cost of debt is 6.50%, the yield on the preferred is 6.00%, the cost of common stock is 11.25%, and the tax rate is 40%. What is the WACC?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 23

The 8 percent annual coupon bonds of the ABC Co. are selling for $880.76. The bonds mature in 10 years. The bonds have a par value of $1,000 and payments are made semi-annually? What is the before-tax cost of debt?
Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 24

ABC Inc.'s perpetual preferred stock sells for $62.8 per share, and it pays an $8.5 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of $4 per share. What is the company's cost of preferred stock for use in calculating the WACC?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 25

If the market value of debt is $104,892, market value of preferred stock is $77,164, and market value of common equity is 204,138, what is the weight of common equity?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 26

The 8.5 percent annual coupon bonds of the ABC Co. are selling for $1,179. The bonds mature in 12 years. The bonds have a par value of $1,000. If the tax rate is 30%, what is the after-tax cost of debt?
Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 27

Several years ago, the ABC Company sold a $1,000 par value bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $925 and the company'stax rate is 40%. What is the after-tax cost of debt?

QUESTION 28

The before-tax cost of debt is 9 percent. What is the after-tax cost of debt if the tax rate is 48 percent?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 29

ABC Industries will pay a dividend of $1 next year on their common stock. The company predicts that the dividend will increase by 4 percent each year indefinitely. What is the firm's cost of equity if the stock is selling for $39 a share?
Enter your answer in percentages rounded off to two decimal points. DO not enter % in the answer box.

QUESTION 30

If the market value of debt is $160,199, market value of preferred stock is $83,141, and market value of common equity is 257,544, what is the weight of preferred stock?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 31

The 7 percent annual coupon bonds of the ABC Co. are selling for $950.41. The bonds mature in 8 years. The bonds have a par value of $1,000 and payments are made semi-annually. If the tax rate is 35%, what is the after-tax cost of debt?
Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 32

The ABC Company has a cost of equity of 16.8 percent, a pre-tax cost of debt of 7.9 percent, and a tax rate of 30 percent. What is the firm's weighted average cost of capital if the proportion of debt is 58.4%?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

Reference no: EM131018663

Questions Cloud

What recommendations would you give to martin : What recommendations would you give to Martin? Susan? And the rest of the Project Team? Make certain your recommendations include specific examples of possible future action.
Whether you are revising your recommendation or not and why : Right after you sent the memo to your boss, you were given the news that your client has just moved to California and now is subject to a state marginal tax rate of 9.55%. Write a brief e-mail to your boss that explains:
Draw a graph of the firm demand curve : In the space below draw a graph of the firm's demand curve and its marginal cost curve. Label this graph clearly and completely. Redraw the graph you had in (a) so that you can use it to guide your work in (d)
Write a critical analysis paper about the story of an hour : Write a Critical Analysis Paper about The Story of An Hour. You are analyzing/interpreting the literature on your own and coming up with your own thesis.
What is the required rate of return on this stock : The common stock of Wetmore Industries is valued at $63.7 a share. The company increases their dividend by 3.8 percent annually and expects their next dividend to be $3. What is the required rate of return on this stock?Note: Enter your answer rou..
Assume oahu kikis records show the following for the month : Assume Oahu Kiki's records show the following for the month of January. Sales totaled 310 units.
Which of the following accounts are closed at year end : Which of the following would not appear in a post-closing trial balance? a. Accumulated Depreciation, b. Unearned Service Fees, c. Accounts Receivable, d. Depreciation Expense
Explain how the gospel is both inclusive and exclusive : Define the [pre-] Gnosticism that St. Paul is addressing in Colossians. What is it basically? Elaborate regarding its core elements in terms of it occult teaching, ritualism, asceticism, and worship. Most importantly study Colossians 2 to explain ..
Write equation in slope-intercept form for libby budget line : Write an equation in slope-intercept form for Libby's budget line. Suppose that Libby maximizes her utility given budget line 1 when she selects a bundle that includes 20 sodas. How many balloons are in this optimal consumption bundle

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd