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The Fridge-Air Company’s preferred stock pays a dividend of $4.50 per share annually. If the required rate of return on comparable quality preferred stocks is 14%, calculate the value of Fridge-Aire’s preferred stock.
The Joseph Company has a stock issue that pays a fixed dividend of $3.00 per share annually. Investors believe the nominal risk-free rate is 4% and that this stock should have a risk premium of 6%. What should be the value of this stock?The Lo Company earned $2.60 per share and paid a dividend of $1.30 per share in the year just ended. Earnings and dividends per share are expected to grow at a rate of 5% per year in the future. Determine the value of stock: a. if the required rate of return is 12%. b. if the required rate of return is 15%. c. Given your answers to a & b, how are stock prices affected by changes in investor’s required rate of return? In late 2010, you purchased the common stock of a company that has reported significant earnings increases in nearly every quarter since your purchase. The price of the stock increased from $12 a share at the time of the purchase to a current level of $45. Notwithstanding the success of the company, competitors are gaining much strength. Further, your analysis indicates that the stock may be over-priced based on your projection of future earning growth.Your analysis, however, was the same one year ago and the earnings have continued to increase. Actions that you might take range from an outright sale of the stock to doing nothing and continuing to hold the shares. You reflect on these choices as well as other actions that could be taken. Describe the various actions that you might take and their implicationsFind the real return on the following investments:Stock Nominal Return InflationA 10% 3%B 15% 8%C -5% 2% The countries of Stabilato and Variato have the following average returns and standard deviations for thei stocks, bond, and short-term government securities.What range of returns should you expect to earn 95% of the time for each asset class in you invested in Stabilato’s securities?From investing in Variato’s securities?
Discuss the future of the specialty shop if producers place greater emphasis on mass selling because of the inadequacy of retail order-taking.
Javits & Son's common stock currently trades at $30.00 a share. It is expected to pay an annual dividend of $3.00 a share at the end of the year (D1=$3.00), and the constant growth rate is 5% a year.
Redan Manufacturing uses 2,400 switch assemblies per week and then reorders another 2,400. The relevant carrying cost per switch assembly is $9.50, and the fixed order cost is $1,200.
If 2-year and 5-year Treasury notes both yield 10%, what is the difference in the maturity risk premiums (MRPs) on the two notes; that is, what is MRP5 minus MRP2? Round your answer to two decimal places.
Use Appendix B and Appendix D. Compute the price of the bonds for these maturity dates (Round "PV Factor" to 3 decimal places, intermediate and final answers to 2 decimal places.
A low-carbon-steel machine part, operating in a corrosive atmosphere, lasts 6 years, and costs $350 installed. If the part is treated for corrosion resistance it will cost $500 installed.
What are the two sources of return on stocks for the shareholder? What is the relation between the required rate of return on a stock and the two sources of return in the constant dividend growth model?
Determine Net Present value,whether investment should be favourably considered. Lostus ltd plans investment in non current asset costng R300000.the non current assets will have 4 year life.year 1 R324000,year 2 R720000,year 3 R100000,year 4 R150000.
The heart of discounted cash flows analysis is the assumptions behind the numbers. Once the mechanics of the tool are mastered, then one needs to focus on the assumptions behind the numbers.
what is the project's year 0 net cash flow? Year 1? Year 2? Year 3? If the required return is 12 percent, what is the project's NPV?
It estimates that, in current market conditions, the bonds should provide a (nominal annual) return of 14 percent. What price per bond should Suresafe be able to realize on the sale?
If a random variable is drawn from a normal distribution, what is the probability that the random variable is larger than 1.96 standard deviations larger than the mean?
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