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Stock in CDB Industries has a beta of .96. The market risk premium is 7.1 percent, and T-bills are currently yielding 4.1 percent. CDB’s most recent dividend was $2.50 per share, and dividends are expected to grow at a 5.1 percent annual rate indefinitely. The stock sells for $47 per share. Required: Using the CAPM, what is your estimate of CDB’s cost of equity? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Cost of equity % Using the dividend discount model, what is your estimate of CDB’s cost of equity? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Cost of equity % What is your best estimate of CDB’s cost of equity? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) Cost of equity %
Given the following data for a stock: beta = 1; risk-free rate = 4%; market premium = 6%. Calculate the expected rate of return on this stock using the capital asset pricing model.
You have looked at the current financial statements for Reigle Homes, Co. What is the price per share of the company's stock?
A trader buys 100 shares of a stock on margin. The price of the stock is $30. The initial margin is 60% and the maintenance margin is 40%. How much money does the trader have to provide initially? For what share price is there a margin call?
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Both Bond Bill and Bond Ted have 11.4 percent coupons, make semiannual payments, and are priced at par value. Bond Bill has 5 years to maturity, whereas Bond Ted has 22 years to maturity. Both bonds have a par value of 1,000. If interest rates sudden..
At year-end 2013, Wallace Landscaping’s total assets were $1.9 million and its accounts payable were $435,000. Sales, which in 2013 were $2.0 million, are expected to increase by 25% in 2014. Total assets and accounts payable are proportional to sale..
Suppose that today’s date is April 15. A bond with a 8.0% coupon paid semiannually every January 15 and July 15 is listed in The Wall Street Journal as selling at an ask price of 101:15. If you buy the bond from a dealer today, what price will you pa..
Using the ?P/E ratio approach to? valuation, calculate the value of a share of stock under the following? conditions:
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Orange Spark, Inc. just purchased a new storage facility. The company will begin making loan payments of $15513 at the end of year 5. Orange Spark will make a payment at the end of each year for 11 years. How much should Orange Spark deposit today, i..
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