**Anle Corporation: Equity Cost of Capital Calculation**Anle Corporation has a current stock price of $19.63 and is expected to pay a dividend of $0.75 in one year. Its expected stock price right after paying that dividend is $21.45.**a.** What is Anle's equity cost of capital?**b.** How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain?*Note: This exercise involves understanding the concepts of equity cost of capital, dividend yield, and capital gains as part of financial analysis.*

Given, Stock price after paying dividend (P1) = $21.45 Dividend (D) = $0.75 Current stock price (P0)…

Answered: Anle Corporation has a current stock…

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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Similar questions

Matilda Industries pays a dividend of $2.50 per share and is expected to pay this amount indefinitely. If Matilda's equity cost of capital is 12%, which of the following would be expected to be closest to Matilda's stock price? A. $12.50 B. $16.66 C. $20.83 D. $26.04
You are considering investing in a rental property. Market rent for similar properties is 1, 500 a month (18,000 a year). Maintenance costs, property tax and insurance add up to 4, 000 a year. You expect rent and cost to increase at 5% a year. You plan to hold the property for 10 years and expect to sell it at the end of 10 years for $250,000. How much should you pay for it now if you're asking for a return of 15% ?Question 13 options: $152, 134.01 $132, 058.94 $169, 321.37 $145, 426.88
Beta Corporation’s current stock price is $90 and total number of shares is 1 billion. The company will generate free cash flow of $10 billion for the year ahead, all of which it will payout to its shareholders as a dividend. What would be the price at the ex dividend date? (SHOW YOUR WORK)
Anle Corporation has a current price of $13, is expected to pay a dividend of $2 in one year, and its expected price right after paying that dividend is $22. What is Anle's expected dividend yield? (Round to two decimalplaces.) What is Anle's expected capital gain rate? (Round to two decimalplaces.) What is Anle's equity cost of capital? (Round to two decimalplaces.)
Bha
Anle Corporation has a current stock price of $21.99 and is expected to pay a dividend of $1.00 in one year. Its expected stock price right after paying that dividend is $23.92. a. What is Anle's equity cost of capital? b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain? a. What is Anle's equity cost of capital? Anle's equity cost of capital is ☐ %. (Round to two decimal places.)
Maynard Steel plans to pay a dividend of $2.82 this year. The company has an expected earnings growth rate of 3.9% per year and an equity cost of capital of 9.5%. a. Assuming that Maynard's dividend payout rate and expected growth rate remain constant, and that the firm does not issue or repurchase shares, estimate Maynard's share price. b. Suppose Maynard decides to pay a dividend of $0.95 this year and use the remaining $1.87 per share to repurchase shares. If Maynard's total payout rate remains constant, estimate Maynard's share price. a. Assuming that Maynard's dividend payout rate and expected growth rate remain constant, and that the firm does not issue or repurchase shares, estimate Maynard's share price. Maynard's share price will be $ (Round to the nearest cent.)
Bha
Using the data from question 2, please answer question 3.
Maynard Steel plans to pay a dividend of $3.18 this year. The company has an expected earnings growth rate of 4.5% per year and an equity cost of capital of 10.8%. a. Assuming that Maynard's dividend payout rate and expected growth rate remain constant, and that the firm does not issue or repurchase shares, estimate Maynard's share price. b. Suppose Maynard decides to pay a dividend of $1.08 this year and use the remaining $2.10 per share to repurchase shares. If Maynard's total payout rate remains constant, estimate Maynard's share price. a. Assuming that Maynard's dividend payout rate and expected growth rate remain constant, and that the firm does not issue or repurchase shares, estimate Maynard's share price. Maynard's share price will be $. (Round to the nearest cent.)
Assume Evco, Inc. has a current stock price of $49. 11 and will pay a $2.25 dividend in one year, its equity cost of capital is 18%. What price must you expect Evco stock to sell for immediately after the firm pays the dividend in one year to justify its current price? We can expect Evco stock to sell for $ ( Round to the nearest cent.)
RFC Corp. has announced a$2.40 dividend. If RFC's last price cum-dividend is $48 , what should be its first ex-dividend price (assuming perfect capital markets)?

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