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Nofal Corporation will pay a $4.70 per share dividend next year. The company pledges to increase its dividend by 7.25 percent per year, indefinitely. Required: If you require a return of 10 percent on your investment, how much will you pay for the company’s stock today? (Do not round intermediate calculations. Round your answer to 2 decimal places (e.g., 32.16).)
An unlevered corporation has net income of $50,000 and a required rate of return of 14%. What would the value of this firm be if it borrowed $125,000 to buy back some of its stock? Assume a corporate tax rate of 35%. Show work
Thress Industries just paid a dividend of $1.00 a share (i.e., D0 = $1.00). The dividend is expected to grow 5% a year for the next 3 years and then 12% a year thereafter. What is the expected dividend per share for each of the next 5 years?
Consider the following information regarding the performance of a money manager in a recent month. The table presents the actual return of each sector of the manager’s portfolio in column, the fraction of the portfolio allocated to each sector in col..
Advance, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 20 years to maturity that is quoted at 108 percent of face value. The issue makes semiannual payments and has a coupon rate of 10 percent annually. Wha..
Calculate the value of a three-month European put futures option when the futures price is $18, the strike price is $20, the risk-free rate is 10% per annum, and the volatility of the futures price is 30% per annum. Use DervaGem to check your price c..
You just won the magazine sweepstakes and opted to take unending payments. The first payment will be $21,500 and will be paid one year from today. Every year thereafter, the payments will increase by 2.5 percent annually. What is the present value of..
Sarah and James Hernandez purchased 300 shares of Cisco Systems stock at $18.15 a share. One year later, they sold the stock for $23.10 a share. They paid a broker a $36 commission when they purchased the stock and a $50 commission when they sold the..
Mr. Z, who is in the 33 percent marginal tax bracket and itemizes deductions, recently inherited $30,000. He is considering three alternative uses for this windfall: Compute the annual increase in Mr. Z's after tax cash for each of these three altern..
Microtech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends. However, investors expect Microtech to begin paying dividends, beginning with a dividend of $1.25 coming 3 years from toda..
A stock, currently trading at $50, expects to pay a $4.50 dividend this year. The dividends and stock price has been growing at 8% for 10 years. What is the expected return on the stock this year?
Series Average return Large stocks 12.06 % Small stocks 16.76 Long-term corporate bonds 6.38 Long-term government bonds 6.1 U.S. Treasury bills 3.98 Inflation 3.1. Determine the return on a portfolio that was equally invested in large-company stocks ..
Treasury bills and Treasury notes are an investment security issued by the U.S. government. A Treasury bill matures within one year and investors typically roll over the matured Treasury bill and purchase another Treasury bill the same day. Treasury ..
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