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Return on Common Stock
You buy a share of The Ludwig Corporation stock for $20.80. You expect it to pay dividends of $1.02, $1.14, and $1.2741 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $31.78 at the end of 3 years.
Calculate the growth rate in dividends. Round your answer to two decimal places.
%
Calculate the expected dividend yield. Round your answer to two decimal places.
Assuming that the calculated growth rate is expected to continue, you can add the dividend yield to the expected growth rate to obtain the expected total rate of return. What is this stock's expected total rate of return? Round your answer to two decimal places.
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ou will receive 31 annual payments of $175,000, with the first payment being delivered one year from today. The income will be taxed at a rate of 28 percent. Tax will be withheld when the checks are issued.
What is the expected arithmetic return of a security based on the following historical data?
Assume that the economy can experience high growth, normal growth, slow down or severe recession. Under these conditions you expect the following stock market returns for the coming year: compute the standard deviation of the return as a percentage o..
Suppose the banking systems non-borrowed reserves total $58.3 billion with total legal reserves standing at $65.2 billion. What must borrowed reserves be? This morning the Federal Reserve decided to undertake the purchase of $700 million in governmen..
Pearce’s has a long-term debt ratio of .45 and a current ratio of 1.25. Current liabilities are $875, sales are $5,780, profit margin is 9.5%, and ROE is 18.5%. What is the amount of net fixed assets?
How sensitive is return on capital to the forecast assumptions in case Exhibit 8? What independent changes in Carrie Galeotafiore's estimates are required to drive the 2002 return-on-capital estimate below Home Depot's cost-of-capital estimate of ..
Which one of the following will occur when the internal rate of return equals the required return? Explain why?
Before month-end adjustments are made, the September 30 trial balance of Horton Enterprise contains revenue of $9,200 and expenses of $6,500. Calculate the correct net income for Horton’s for September.
You find a bond with 25 years until maturity that has a coupon rate of 10.0 percent and a yield to maturity of 8.5 percent. Suppose the yield to maturity on the bond increases by .25 percent. What is the new price of the bond using duration?
A project that provides annual cash flows of $16,600 for eight years costs $72,000 today. What is the NPV for the project if the required return is 7 percent? What is the NPV for the project if the required return is 19 percent? At what discount rate..
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