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The last dividend paid by Marquette Inc. was $1.25. The dividend growth rate is expected to be constant at 15% for 3 years, after which dividends are expected to grow at a rate of 6% forever. If the firm's required return (rs) is 11%, what is its current stock price?Also, with a current market stock price of $30.00 per share, what does this tell you as an existing investor (stockholder) in this company, and what does this tell the Chief Financial Officer of the company who is thinking about raising additional equity capital?To estimate the company's WACC, Centric Parts, Inc. recently hired you as a consultant. You have obtained the following information. (1) The firm's noncallable bonds mature in 20 years have an 8.00% annual coupon, a par value of $1,000, and a market price of $1,050.00. (2) The company's tax rate is 40%. (3) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock's beta is 1.20. (4) The target capital structure consists of 35% debt and the balance is common equity. The firm uses the CAPM to estimate the cost of common stock, and it does not expect to issue any new shares. What is its WACC?Additionally, Centric Parts has a current Return on Assets of 8.0%. Should they be concerned about their ability to acquire future capital? Why or why no
Assume that the shares are repurchased at a price equal to the stock market price prior to the recapitalization. What would be the company's stock price following the recapitalization?
Recommend a strategy for enhancing U.S. GDP over the next five years. Give support for your recommendation. Predict the federal fund rate over next five years, indicating the likely impact on financial markets. Provide support for your rationale.
frank is the receiving dock supervisor for cabinet co. a company that manufactures metal storage cabinets. his job is
The events in the financial markets during the past few years have been sweeping and historic, and they have resulted in the biggest federal bailout efforts in history.
How is preferred stock similar to bonds?
If Welch establishes its dividends from the residual dividend model, what will be its payout ratio? Round your answer to two decimal places.
Why is the US$ acceptable in the US and in a number of other countries? In what circumstances would the US$ no longer be acceptable? Explain how banks create checkable deposits by issuing loans.
On June 8, Alton Co. issued an $80,000, 6%, 120-day note payable to Seller Co. Assume that the fiscal year of Seller Co. ends June 30. Using the 360-day year in your calculations, what is the amount of interest revenue recognized by Seller in the ..
Repeat the calculation using a handheld financial calculator. Would he have made a 20 percent rate of return if the stock had risen to $30 a share?
Graph the profit potential (if any) for this position. What is the maximum profit and the maximum loss the trader can incur? At what price of the stock does the diagonal spread break-even?
Explain Determination of real rate of return
Explain how a net present value (NPV) profile is used to compare projects. How does this compare to internal rate of return (IRR)? How does reinvestment affect NPV and IRR?
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