A firm has a dividend yield of 9%. What is the expected return, if a firm has a 45% payout ratio, a return on equity of 10%, and assuming dividends grow at a constant rate?
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- A firm has a required rate of return (k) of 15 percent and a return on equity (ROE) of 18%. If the plowback ratio is 40% what is the stock's P/E ratio?a company has a stock of 1.40, risk free 4.25%, market risk of 5.50%. what is the future return growth rate?What is the cost of equity for a firm if the firm's equity has a beta of 1.4, the risk-free rate of return is 3%, the expected return on the market is 10%, and the return to the company's debt is 7%?
- Assuming the CAPM or one-factor model holds, what is the cost of equity for a firm if the firm's equity has a beta of 1.2, the risk-free rate of return is 4%, the expected return on the market is 10%, and the return to the company's debt is 7%? A. 11.2% B. 11.4% C. 12.8% D. 12.9% E. None of these.Assume the risk-free rate is 4% and the beta for a particular firm is 2, current firm share price is $35 and the market risk premium is 8%. A.Given the risk level, what is the one-year required rate of return (we will call this k)? B.If next year’s expected dividend is $3, use k from part A to solve for the expected next year’s price.Suppose the current risk -free rate of return is 5 percent and the expected market risk premium is 7 percent. Using this information, estimate the cost of retained earnings for a company with a beta coefficient equal to 2.0?
- Risk free rate = 5.00%; market return = 11.00%; and beta = 1.05. How much is the firm's cost of equity based on the CAPM? 11.30% 11.64% 11.99% 12.35%Suppose your company has an equity beta of 0,9 and the current risk-free rate is 7,1%. if the expected market risk premium is 10%, what is your cost of equity capital?What is the expected return on a stock if the firm will earn 24% during a period of economic boom, 14% during normal economic periods, and 2% during a period of recession if the probabilities of these economic environment are 20%, 65% and 15%, respectively?
- Barton Industries estimates its cost of common equity by using three approaches: the CAPM, the band - yield - plus - nisk - premium approach, and the DCF model. Burton expects next year's annual dividend, D₁, to be $1.70 and it expects dividends to grow at a constant rate g = 5,4% The firm's current common stock price, Po, is $20.00. The current risk-free rate, FRF, = 4.9% the market risk premium, RPM = 6.3%, and the firm's stuck has a current beta, b, = 1.40. Assume that the firm's cast of debt, rd is 10.78%. The firm uses a 3.3% risk premium when arriving at a ballpark estimate of its cost of equity using the bund-vield-risk-premium approach. What is the firm's cost of equity using each of these three approaches? CAPM cost of equity. Band yield plus visle premium: DCF cost of equity: % 1. %Remember that the value of a firm with cost of equity R and dividend growth g is given by D(1)/(R-g), where D(1) is the dividend one year from now. Consider a firm that had a net income NI(0)=100M last year. What would be the value of the firm under the retention rates of 20%, 40%, 60% and 80%? Assume R=20% and ROE=10%You forecast the company A’s future earning is going to be $5.34 per share. The current market price is $55. What the market forward PE ratio? The estimated growth rate is 10%, what is the PEG ratio based on your estimate of growth rate? The industry average has a P/E ratio of 14 and growth rate of 12%, what does it mean for A’s stock price?
