A stock just paid a $7.93 dividend. The required return on the stock is 17.0% and dividends are supposed to grow at 2.0% per year. What is the stock price, P0? On July 1, 2020, just after a dividend payment, you purchased 20,000 shares of Endicott Johnson stock at a price of $704.44 per share. The company paid annual dividends of $3.50 on June 30 of each year. On June 30, 2023, just after receiving the dividend payment, you sell the stock for $707.36. What annual return did you earn? Luther Industries has 25 million shares of common stock outstanding, trading at $18 per share. In addition, Luther has bonds with a total face value of $150 million. The bonds have 20 years to maturity, semi-annual coupon payments, an annual coupon rate of 7.5%, and each bond has a market price of $570. If Luther has a corporate tax rate of 21%, what is their effective (or "after-tax") cost of debt?
A stock just paid a $7.93 dividend. The required return on the stock is 17.0% and dividends are supposed to grow at 2.0% per year. What is the stock price, P0?
On July 1, 2020, just after a dividend payment, you purchased 20,000 shares of Endicott Johnson stock at a price of $704.44 per share. The company paid annual dividends of $3.50 on June 30 of each year. On June 30, 2023, just after receiving the dividend payment, you sell the stock for $707.36. What annual return did you earn?
Luther Industries has 25 million shares of common stock outstanding, trading at $18 per share. In addition, Luther has bonds with a total face value of $150 million. The bonds have 20 years to maturity, semi-annual coupon payments, an annual coupon rate of 7.5%, and each bond has a market price of $570. If Luther has a corporate tax rate of 21%, what is their effective (or "after-tax") cost of debt?
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