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Suppose a stock had an initial price of $121 per share, paid a dividend of $3.30 per share during the year, and had an ending share price of $153. Requirement 1: Compute the percentage total return. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Percentage total return % Requirement 2: What was the dividend yield? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Dividend yield % Requirement 3: What was the capital gains yield? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Capital gains yield %
An investment requires an initial outlay of $50,000, and is expected to generate cash flows of $13,000 a year for eight years. The required return is 11%. Determine the replacement chain NPV for this investment to compare it to a mutually exclusive a..
Two investments, C and D are being evaluated. They are mutually exclusive. Investment C has a higher NPV using any discount rate between zero and 9%, while D has a higher NPV using any discount rate between 9.1% and 15%. Which investment do you recom..
In algebra, we often have to solve simultaneous differential equations. If the equations are linear and independent, there is a unique solution when the number of equations equals the number of variables.
A company is evaluating two competing investments. Investment X has a cost of $100,000 and a NPV estimated at $35,000. Investment Y has a cost of $220,000 and a NPV estimated at $35,500. Taking everything into account, you would recommend the company..
Grantran Metrics is considering new equipment to run their service function for their customers. This equipment would run faster and less expensively than equipment currently in place. This would be best characterized as:
Duggins Veterinary Supplies can issue perpetual preferred stock at a price of $72.50 per share with an annual dividend of $4.50 a share. Ignoring flotation costs, what is the company's cost of preferred stock, rps?
Gontier Corporation stock currently sells for $64.93 per share. The market requires a return of 12 percent on the firm’s stock. If the company maintains a constant 5.5 percent growth rate in dividends, what was the most recent dividend per share paid..
Suppose you are considering either working through school or taking out loans. If you work at a 20 hour job at $15 per hour over 50 weeks per year, you can make $15,000, but it will take 5 years to graduate. How many years will it take to pay back th..
A firm is trying to decide whether to produce a new product. In order to produce this product, the firm would have to invest $4,906,000 in machinery and $490,600 in net working capital. The machinery would be depreciated using the 5-year depreciation..
Paychex Inc. (PAYX) recently paid a $0.86 dividend. The dividend is expected to grow at a 15 percent rate. The current stock price is $62.91. What is the return shareholders are expecting?
John wants to buy a property for $105,000 and wants an 80% loan. The lender indicates that a fully amortizing loan can be obtained for 30 years at 12% MEY, with loan origination fees (all lender controlled fees) of $3,500. What is the effective inter..
Berth Cargo Corporation is considering going public. Managers want to estimate common stock value. The firm’s weighted average cost of capital is 11%, and it has $1.5 million of debt at market value, and $400,000 of preferred stock also at market val..
calculate the weighted average cost for the Ban Corp.
A firm has 120,000 shares of stock outstanding, a sustainable rate of growth of 3.8, and $648,200 in free cash flows. What value would you place on a share of this firm's stock if you require a 14% rate of return?
What annual rate of return is earned on a $3,200 investment when it grows to $6,900 in twenty years?
Discuss the following statement: “If a firm has only independent projects, a constant WACC, and projects with normal cash flows, then the NPV and IRR methods will always lead to identical capital budgeting decisions.” What does this imply about the c..
Saunders Corp. has a book net worth of $13,430. Long-term debt is $8,650. Net working capital, other than cash, is $3,305. Fixed assets are $17,830 and current liabilities are $1,810. How much cash does the company have? What is the value of the curr..
Corporations often use different costs of capital for different operating divisions. Using an example, calculate the weighted cost of capital (WACC). What are some potential issues in using varying techniques for cost of capital for different divisio..
Al is given a fifteen-year annuity with end-of-year payments. The first payment Al receives, precisely one year from the date he is given the annuity, is for $100, and then subsequent payments decrease by 4% annually.
Pat sells real estate for $30,000 cash and $120,000 5-year note. If her basis in the property is $90,000 and she receives only the $30,000 down payment in the year of the sale, how much is Pat's taxable gain in the year of sale using the instalment s..
The validity of the Financial Director's proposed treatment of stock valuation and revenue recognition, referring to relevant International Accounting Standards as appropriate.
Firm ABC just elected three members to their board of directors. In doing so, they elected them one at a time, effectively eliminating minority participation. Thus, they did _______ voting.
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