Determine the rate of return, Finance Basics

1. A stock pays no dividend and is expected to be sold for $50 after 4 years. If the investor's RRR is 12%, at what price is he/she willing to buy it?

2. ABC company has its ROE=10% and a retention rate at 30% of its net income for reinvestment purpose. It recently paid a dividend of $2. The stock is currently selling for $50. What is the expected rate of return for the stock? If your RRR is 12%, will you be willing to buy it? If your RRR is 15%, will you be willing to buy?

3. A common stock sells for $50 and will pay a dividend of $3.5 next period. The firm has a constant growth rate of 15%. What is the expected rate of return? If your RRR is 20%, will you buy it?

4. You're planning to buy between preferred Stock A and B. Stock A pays an annual dividend of $6 and is currently selling for $60. Stock B pays an annual dividend of $8 and is selling for $75. Which one will you buy?

 

 

Posted Date: 2/18/2013 6:35:37 AM | Location : United States







Related Discussions:- Determine the rate of return, Assignment Help, Ask Question on Determine the rate of return, Get Answer, Expert's Help, Determine the rate of return Discussions

Write discussion on Determine the rate of return
Your posts are moderated
Related Questions
Social responsibility - Objectives of Business Entity The firm must decide where to operate strictly in their shareholders' best interests or be responsible to their staff, th

Discuss capital budgeting techniques including : the Payback Rule, IRR, NPV, and the Profitability Index. Be sure to discuss the advantages and disadvantages of each one.  Di

Question: (a) (i) Define the term multicollinearity. (ii) Explain why it is important to guard against multicollinearity. (b) (i) Sometimes we encounter missing value

Hatch System - Stock Exchange This is an automatic system based on the assumption such when investors sell at a certain percent age below the top of the market and buys at a s

EOQ Assumptions The basic EOQ model creates the following supposition as: i) The demand is identified and constant over the year ii) The ordering cost is con

evaluate the source of finance for a business project

Valuation of Business A business may be valued for different type of reasons that as for merger, acquisition, or takeover or liquidation or outright sale.  During purchasing a

Central Bank - Banking Institutions This is a bank which is entrusted along with the responsibility of keeping economic stability and financial soundness of a country.  Theref

Earnings Method or Earning Basis Valuation By using the earning valuation method, a company will employ its P/E ratio to value its shares. P/E    =  MV/E MV    =   E x P

Ask question #MinimQuestion You are the financial accountant of Donald Bhd, a manufacturer and wholesaler of soft drinks. Donald Bhd is in direct competition with Fizz Bhd and Po