FIN 691 Graded WACC Valuation Problem Set

Cost of equity

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The cost of equity using the discounted cash flow (or dividend growth) approach Grant Enterprises's stock is currently selling for $32.45 per share, and the firm expects its per-share dividend to be $1.38 in one year. Analysts project the firm's growth rate to be constant at 7.27%. Estimating the cost of equity using the discounted cash flow (or dividend growth) approach, what is Grant's cost of internal equity? O 15.55% . 11.52% O 12.10% O 10.94% Estimating growth rates It is often difficult to estimate the expected future dividend growth rate for use in estimating the cost of existing equity using the DCF or DG approach. In general, there are three available methods to generate such an estimate: • Carry forward a historical realized growth rate, and apply it to the future. • Locate and apply an expected future growth rate prepared and published by security analysts. • Use the retention growth model. Suppose Grant is currently distributing 50% of its earnings in the form of cash…

The following financial information is available on Rawls Manufacturing Company: Current per share market price $48.00 Current per share dividend $3.50 Current per share earnings $6.00 Beta 1.1 Expected rate of return on market 12.0% Risk-free rate 6.0% Expected long-term growth rate 5.0% ​ Rawls can issue new common stock to net the company $44 per share. Determine the cost of external equity capital using the dividend capitalization model approach. (Compute answer to the nearest 0.1%.)

The following financial information is available on Rawls Manufacturing Company: Current per share market price $48.00 Current per share dividend $3.50 Current per share earnings $6.00 Beta 1.1 Expected rate of return on market 12.0% Risk-free rate 6.0% Expected long-term growth rate 5.0% Rawls can issue new common stock to net the company $44 per share. Determine the cost of external equity capital using the dividend capitalization model approach. (Compute answer to the nearest 0.1%.) Question 12Answer   a. 13.4% b. 12.6% c. 12.7% d. 14.4%

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Please calculate investment in net working capital, net cash flows, and present value of net cash flows! Thank you!

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Expected Return of Common Stock Wooster Inc. has common stock with a market price of $120 per share. We expect the next dividend to be $9 and the constant growth rate to be 4% Calculate the following: Expected return (Total yield) Dividend yield Capital gain or loss yield b.

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What is the cost of equity using SML

Question: The next dividend payment by Halestorm, $1.64 per Inc., will be share. The dividends are anticipated to maintain a a growth rate of 8 percent forever. The stock currently sells for $31 per share. a. What is the dividend yield? b. What is the expected capital gains yield?

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