What is the company cost of equity

Assignment Help Financial Management
Reference no: EM131575520

The Down and Out Co. just issued a dividend of $2.46 per share on its common stock. The company is expected to maintain a constant 5 percent growth rate in its dividends indefinitely. If the stock sells for $45 a share, what is the company's cost of equity? (Do not round your intermediate calculations.)

10.74%

10.47%

11.28%

10.2%

5.85%

Reference no: EM131575520

Questions Cloud

Calculate the price of the bond : Calculate the price of the bond. If the yield-to-maturity would increase to 9%, what will be the price of the bond?
What is company cost of equity capital : If the risk-free rate is 3.5 percent and the expected return on the market is 14 percent, what is the company's cost of equity capital?
How much will they need to save each year : If they make annual payments into a savings plan, how much will they need to save each year
What is principal balance on the loan : In 16 years you decide to sell your house and pay off the mortgage. What is the principal balance on the loan?
What is the company cost of equity : If the stock sells for $45 a share, what is the company's cost of equity?
Included in the cash flow analysis of new product : Which of the following items should NOT be included in the cash flow analysis of a new product?
You own a stock that you are considering selling : You own a stock that you are considering selling. The current dividend is $1.10/share. If the dividend is fixed, what is the value of the stock?
The bonds make semiannual payments-common stock-debt : Debt: 4,500 8.5 percent coupon bonds outstanding, $1,000 par value, 19 years to maturity, selling for 102 percent of par; the bonds make semiannual payments.
Number of securities can influence risk management : explain how different asset classes and the number of securities can influence risk management.

Reviews

Write a Review

Financial Management Questions & Answers

  Maker of pop tarts recent introduces new flavor

Maker of pop tarts recent introduces a new flavor, gone nutty.

  Chooses to go ahead with the sponsorship

An auto-parts company is deciding whether to sponsor a racing team for a cost of $3500000. The sponsorship would last for 4 years and is expected to increase cash flows by $760000 per year. If the discount rate is 9%, what will be the change in the v..

  What is the internal rate of return on this project

Quick Sale Real Estate Company is planning to invest in a new development. The cost of the project will be $23 million and is expected to generate cash flows of $14,000,000, $11,750,000, and $6,350,000 over the next three years. The company's cost of..

  Calculate the return on invested capital for each firm

Firms HL and LL are identical except for their financial leverage ratios and the interest rates they pay on debt. Calculate the rate of return on equity firm

  Different payment streams and appropriate required returns

You have two assets and must calculate their values today based on their different payment streams and appropriate required returns. Asset 1 has a required return of 14% and will produce a stream of $600 at the end of each year indefinitely. Asset 2 ..

  Plans to issue bonds to raise-flotation costs

Moms Motel Corporation (MM) plans to issue bonds to raise $175 million that it needs to support future operations. MMs investment banker will charge 2.5 percent of the total amount issued to help MM raise the funds. In addition, MM will incur other c..

  Using arithmetic average quarterly

Using a 4-step binomial tree price an Asian Average Price Put with a strike of $22 using arithmetic average quarterly.

  Appropriate discount rate for the project

Lakonishok Equipment has an investment opportunity in Europe. The project costs €12 million and is expected to produce cash flows of €1.8 million in Year 1, €2.6 million in Year 2, and €3.5 million in Year 3.

  Expected cash inflows

Project K costs $35,000, its expected cash inflows are $11,000 per year for 12 years, and its WACC is 12%. What is the project's NPV? Round your answer to the nearest cent.

  What is the NPV of the project

You have been hired as a consultant for Pristine Urban-Tech Zither, Inc. (PUTZ), manufacturers of fine zithers. The market for zithers is growing quickly. The company bought some land three years ago for $1.49 million in anticipation of using it as a..

  Compute the percentages for all items

Total revenue is always 100 percent. Be sure to use the formula function in Microsoft Excel to show the formulas for each of the percentage you compute.

  Retirement community and is negotiating with client

Mary is running a retirement community and is negotiating with a client, Jimmy, who wishes to reside at Mary’s community when he retires in ten years at age 65. Actuarial statistics indicate that Jimmy will probably die at age 90. Calculate the prese..

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