After reading this chapter, it isn't surprising that you're becoming an investment wizard. With your newfound expertise, youpurchase 100 shares of KSU Corporation for $26.71 per share. Assume the price goes up to $32.29 per share over the next 12months and you receive a qualified dividend of $0.46 per share. What would be your total return on your KSU Corporationinvestment? Assuming you continue to hold the stock, calculate your after-tax return. How is your realized after-tax return differentif you sell the stock? In both cases assume you are in the 25 percent federal marginal tax bracket and 15 percent long-termcapital gains and qualified dividends tax bracket and there is no state income tax on investment income....Your total rate of return on your KSU Corporation investment is 22.61 %. (Round to two decimal places)Assuming you continue to hold the stock, your after-tax rate of return is %. (Round to two decimal places.)

What is Stock Price? The term stock price refers to the current price that a share of stock is…

Answered: After reading this chapter, it isn't…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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After reading this chapter, it isn't surprising that you're becoming an investment wizard. With your newfound expertise, you purchase 100 shares of KSU Corporation for $29.52 per share. Assume the price goes up to $36.77 per share over the next 12 months and you receive a qualified dividend of $0.69 per share. What would be your total return on your KSU Corporation investment? Assuming you continue to hold the stock, calculate your after-tax return. How is your realized after-tax return different if you sell the stock? In both cases assume you are in the 25 percent federal marginal tax bracket and 15 percent long-term capital gains and qualified dividends tax bracket and there is no state income tax on investment income. Your total rate of return on your KSU Corporation investment is % (Round to two decimal places.) Assuming you continue to hold the stock, your after-tax rate of return is%. (Round to two decimal places) Your realized after-tax rate of return if you sell the stock is%.…
You are considering purchasing shares in First Dawn Inc. Your research reveals the dividend trend for First Dawn provided in the table below. It is expected that in 2022, First Dawn will declare a dividend of $3.02 per share. You feel that an investment in this or a similar company is expected to offer a 13% return. What price will you be willing to pay to buy 1 share of First Dawn Inc.?
Please use Excel to solve: You have just purchased a share of stock for $20. The company is expected to pay a dividend of $0.50 per share in exactly one year. If you want to earn a 10% return on your investment, what price do you need if you expect to sell the share immediately after it pays the dividend?
You are interested in buying a share of stock in ABC Corporation. You expect a dividend payment of $0.50 next year and that the dividend will grow by 5% per year thereafter. You desire a 10% return on your purchase. According to the Gordon growth model (the dividend-discount model), what is the maximum price you would pay for a share of this stock? Please show your work.
Suppose you are thinking of purchasing the Luna Co.’s common stock today. If you expect Luna to pay $2.5, $2.625, $2.73, and $2.81 dividends at the end of year one, two, three, and four respectively and you believe that you can sell the stock for $40.97 at the end of year four. If you required return on this investment is 9%, how much will you be willing to pay for the stock today?
Assume you are a financial planner seeking to earn some dividend income for a client, and thus need to understand the value of a $50,000 investment in a stock, ABC, which will pay an annual dividend in the amount of $.06 per dollar invested. Meaning, a $50,000 investment in this company will equate to $3,000 per year in dividend income. Assuming that all dividend income can be reinvested and earn 4% annually in interest, and your client would like to cash out the dividend income in 4 years, what is the future value of this stream of dividend payments? O $12,000.00 $12.459.64 O $13,248.97 O $16.248.97
One year ago, you brought a stock for $37.25 per share. You received a dividend of $1.27 per share last month and sold the stock today for $39.75 per share. What is the capital gains yield on this investment? Can the calculator and excel solution be provided?
Suppose you are thinking of purchasing the Moore Co.’s common stock today. If you expect Moore to pay $2.5, $2.625, $2.73, and $2.81 dividends at the end of year one, two, three, and four respectively and you believe that you can sell the stock for $40.97 at the end of year four. If you required return on this investment is 9%, how much will you be willing to pay for the stock today?
You are considering purchasing shares in First Dawn Inc. Your research reveals the dividend trend for First Dawn provided in the table below. It is expected that in 2022, First Dawn will declare a dividend of $3.02 per share. You feel that an investment in this or a similar company is expected to offer a 13% return. What price will you be willing to pay to buy 1 share of First Dawn Inc.? Year Dividend Per Share ($) 2021 2.87 2020 2.76 2019 2.60 2018 2.46 2017 2.37 2016 2.25.
You are considering purchasing shares in First Dawn Inc. Your research reveals the dividend trend for First Dawn provided in the table below. It is expected that in 2022, First Dawn will declare a dividend of $3.02 per share. You feel that an investment in this or a similar company is expected to offer a 13% return. What price will you be willing to pay to buy 1 share of First Dawn Inc.? Year Dividend Per Share ($) 2021 2.87 2020 2.76 2019 2.60 2018 2.46 2017 2.37 2016 2.25 a. $39.75 b. $37.75 c. $40.60 d. $40
You just purchased a share of Northstar Sports for $92.46. You expect to receive a dividend of $4.80 in one year. If you expect the price after the dividend is paid to be $94.23, what total return do you expect to earn over the year? What do you expect to be your dividend yield? What do you expect to be your capital gain rate? ... a. If you expect the price after the dividend is paid to be $94.23, what total return do you expect to earn over the year? Your expected total return to earn over the year is 7.11 %. (Round to two decimal places.) b. What do you expect to be your dividend yield? Your expected dividend yield is%. (Round to two decimal places.)
You just purchased a share of SPCC for $95. You expect to receive a dividend of $7 in one year. If you expect the price after the dividend is paid to be $115, what total return will you have earned over the year? What was your dividend yield? Your capital gain rate? The total return you will have earned over the year is _____%. (Round to two decimal places.) Your dividend yield will be ____%. (Round to two decimal places.) Your capital gain rate will be _____%. (Round to two decimal places.)

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