Investor required rate of return on this investment

Assignment Help Financial Management
Reference no: EM13950189

What is the present value of 100 shares of stock that will pay an annual dividend of $5 per share and will be sold in 8 years for $80 per share? Assume that the investor receives the last dividend on the same day that the stock is sold. Also assume that the investor’s required rate of return on this investment is 8.25%. Round your answer to the nearest cent.

Reference no: EM13950189

Questions Cloud

Describe how information could reach the public domain : Analyse different techniques (e.g. media, leaflets, newspapers etc.) for disseminating information relating to the issue of elderly care - Evaluate how the different ways in which information relating to elderly care is presented, which can influen..
Project falls in the five-year MACRS class for tax purposes : An asset used in a four-year project falls in the five-year MACRS class (MACRS Table) for tax purposes. The asset has an acquisition cost of $8,500,000 and will be sold for $1,890,000 at the end of the project. If the tax rate is 30 percent, what is ..
What is the growth rate : Assume that on 1/1/11, the Dow Jones Industrial Average was 11,800. Also assume that on 12/31/11, the Dow is at 12,800. What is the growth rate on the Dow in 2011? If this growth rate continues through 2012, what will be the Dow on 12/31/12?
What is your rate of return : Assume that on 1/1/12 you purchased an investment for $3000. The investment pays you $200 on 12/31 of every year that you hold the security. On 1/1/17 you sell the investment for $3500. What is your rate of return? Round your answer to the nearest te..
Investor required rate of return on this investment : What is the present value of 100 shares of stock that will pay an annual dividend of $5 per share and will be sold in 8 years for $80 per share? Assume that the investor receives the last dividend on the same day that the stock is sold. Also assume t..
What kind of nurse do you want to be : Using APA format, answer the question, "What kind of nurse do you want to be?" This is a personal, reflective paper so references do not need to be included. Please note that this extends beyond what kind of nursing specialty interests you; you sh..
Considering expanding the sales of its cappuccino machines : An Italian company is considering expanding the sales of its cappuccino machines to the U.S market. As a result, the idea of a setting up a manufacturing facility in the U.S should be explored. Why APV model is better than NPV model for capital budge..
Describe the opportunity cost of the installation process : Do you think Holmes would assign costs to each individual product? Why or why not? Describe the opportunity cost of the installation process.
Cost of equity be if the debt-equity ratio were zero : Crosby Industries has a debt-equity ratio of 1.7. Its WACC is 11 percent, and its cost of debt is 8 percent. There is no corporate tax. What would the cost of equity be if the debt-equity ratio were 2? What would the cost of equity be if the debt-equ..

Reviews

Write a Review

Financial Management Questions & Answers

  Combination of factors is likely to lead to superior returns

As discussed in Chapter 10, what combination of factors is most likely to lead to superior returns.

  Financial sense-what is break-even cost per kilowatt hour

Compact fluorescent lamps (CFLs) have become more popular in recent years, but do they make financial sense? Suppose a typical 60-watt incandescent light bulb costs $0.39 and lasts for 1,000 hours. A 15-watt CFL, which provides the same light, costs ..

  What is the value of this bond to an investor

A $1,000 bond is issued with a coupon rate of 8 percent and 20 years to maturity five years ago. If this bond pays interest semi-annually, what is the value of this bond (TODAY) to an investor who requires an 8 percent rate of return?

  What is the profit-maximizing order-up-to level for cash

Jim is a CFO of a mid-sized construction company. One of his key tasks is to ensure that the company has sufficient cash to pay its daily and hourly workers who are hired whenever need arises. What is the profit-maximizing order-up-to level for cash?

  Explain the similarities and differences of the two budgets

You were recently hired as management director of the new I Can Business Incorporated (ICBI). You have been asked to establish policies and systems for the business. Explain the similarities and differences of the two budgets. Give an example of budg..

  Calculate best-case and worst-case NPV figures

We are evaluating a project that costs $1,100,000, has a ten-year life, and has no salvage value. Assume that depreciation is straight-line to zero over the life of the project. Sales are projected at 42,000 units per year. Calculate the best-case an..

  Bonds two years ago at a coupon rate

Soprano’s Spaghetti Factory issued 17-year bonds two years ago at a coupon rate of 7.40 percent. If these bonds currently sell for 96.5 percent of par value, what is the YTM?

  What was the average rate of return over this period

Donna would like to attend law school soon. After researching the cost of tuition, she determines that she will need to save $60,000 in 4 years. She decides that she will make weekly deposits into a savings account that earns 2 3/4% interests. How mu..

  What was the approximate inflation rate

Your investments increased in value by 12.6 percent last year but your purchasing power increased by only 11.9 percent. What was the approximate inflation rate? (Round your answer to 1 decimal place. Omit the "%" sign in your response.)

  John and jane doe are senior vice presidents of insurance

john and jane doe are senior vice presidents of insurance mutual of tampa. they co-manage the equity investments for

  Cash outflow in cash budgeting is mainly due

Cash outflow in cash budgeting is mainly due to: A. Capital expenditures B. Labor costs and other expenditures C. Payments on accounts payable D. Taxes, interest payments and dividend payments

  What is monthly savings that realize by refinancing

John took a mortgage loan 5 years ago for $120,000 at 7% interest for 15 years, to be paid in monthly payments. Now, a lender is offering him a new mortgage loan at 5% for 10 years. What is the total financing cost (not include the loan amount itself..

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