Reference no: EM133073814

1.Assume? Evco, Inc. has a current stock price of $45.17 and will pay a $1.95 dividend in one? year; its equity cost of capital is 15%. What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its current? price?

2. You just purchased a share of SPCC for ?$100. You expect to receive a dividend of ?$5 in one year. If you expect the price after the dividend is paid to be ?$110?, what total return will you have earned over the? year? What was your dividend? yield? Your capital gain? rate?

3. Anle Corporation has a current stock price of $20.00 and is expected to pay a dividend of $1.00 in one year. Its expected stock price right after paying that dividend is $22.00.

a. What is? Anle's equity cost of? capital?

b. How much of? Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital? gain?

4. Suppose Acap Corporation will pay a dividend of $2.75 per share at the end of this year and $2.98 per share next year. You expect? Acap's stock price to be $53.24 in two years. Assume that? Acap's equity cost of capital is 8.5%.

a. What price would you be willing to pay for a share of Acap stock? today, if you planned to hold the stock for two? years?

b. Suppose instead you plan to hold the stock for one year. For what price would you expect to be able to sell a share of Acap stock in one? year?

c. Given your answer in ?(b?), what price would you be willing to pay for a share of Acap stock today if you planned to hold the stock for one? year? How does this compare to your answer in ?(a?)?

5. NoGrowth Corporation currently pays a dividend of $0.57 per? quarter, and it will continue to pay this dividend forever. What is the price per share of NoGrowth stock if the? firm's equity cost of capital is 18.5%??