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Calculating the Cost of Equity-Laverne Industries stock has a beta of 1.35. The company just paid a dividend of $.85, and the dividends are expected to grow at 5 percent. The expected return of the market is 11.5 percent, and Treasury bills are yielding 5 percent. The most recent stock price is $83.50. Required: (a) Calculate the cost of equity using the dividend growth model method. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Cost of equity % (b) Calculate the cost of equity using the SML method. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Cost of equity %
What is the yield to maturity on a share of Hospitality Properties Trust B $2.22 preferred stock if an investor buys the stock at $35. Assume dividends are paid annually.
A stock has an annual return of 13 percent and a standard deviation of 60 percent. What is the smallest expected gain over the next year with a probability of 1 percent?
Multinational enterprises are sometimes compared to colonial enterprises that operated at the end of the 19th century. Colonial enterprises were often private firms that benefited from government protection and control of foreign countries. Is this a..
Starting today, George is going to contribute $300 on the first of each month to his retirement account. His employer will contribute an additional 50% of the amount George contributes. If both George and his employer continue to do this and he can e..
Please explain the difference between the modified accrual method and the full accrual method? Under modified accrual accounting, the term expenditure is used instead of expense. Expenditures are generally recognized when the liability is incurred." ..
A Treasury STRIPS is quoted at 93.333 and has 4 years until maturity. What is the yield to maturity?
A firm has a retention ratio of 49 percent and a sustainable growth rate of 7.80 percent. The capital intensity ratio is 1.73 and the debt-equity ratio is .84. What is the profit margin?
(Calculating operating cash flows) Assume that a new project will annually generate revenues of $2,600,000 and cash expenses, (including both fixed and variable cost) of $900,000, while increasing depreciation by $210,000 per year. In addition, l the..
Norma’s Cat Food of Shell Knob ships cat food throughout the country. Norma has determined that through the establishment of local collection centers around the country, she can speed up the collection of payments by two and one-half days. If the com..
What is the net present value of an investment that yields the following cash flows and could be sold for $10 millions at the end of 5 years? Utilize a 10% discount rate. What is the debt service payment on a loan with the following terms ?
You borrowed $25,000 from your parents to buy a car. They want their money back in 5 months with interest at 6% (simple interest rate). What is the total amount you must pay them in 5 months (principle plus interest)?
A mortgage broker is offering a $279,000 33-year mortgage with a teaser rate. In the first two years of the mortgage, the borrower makes monthly payments on only a 5.5 percent APR interest rate. After the second year, the mortgage interest rate charg..
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