Anle Corporation has a current stock price of $19.71 and is expected to pay a dividend of $0.95 in one year. Its expected stock price right after paying that dividend is $21.84. 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.) b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain? The dividend yield is %. (Round to two decimal places.) The capital gain is %. (Round to two decimal places.)

Anle Corporation has a current stock price of $19.71 and is expected to pay a dividend of $0.95 in one year. Its expected stock price right after paying that dividend is $21.84. 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.) b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain? The dividend yield is %. (Round to two decimal places.) The capital gain is %. (Round to two decimal places.)

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter11: Determining The Cost Of Capital

Section: Chapter Questions

Problem 5MC

See similar textbooks

Related questions

Q: Sigma Inc. has just paid a dividend of $2.50 per share, and it is expected to pay a dividend of…

A: The paid dividend (D0) is $2.50. The expected pay dividend (D1) is $2.75. The required return on…

Q: The corporation has had an average annual growth of 6%. The issue cost is $ 2.50 per share.…

A: Information Provided: Dividend for current year = $5 Issue cost = $2.50 Avg annual growth = 6% Stock…

Q: Assume that a company borrows at a cost of 0.08. Its tax rate is 0.35. What is the minimum after-tax…

A: Cost of Capital is the rate that a company is expected to pay on average on all the security holders…

Q: Which of the following events will reduce the company’s WACC?

A: Capital Asset Pricing Model (CAPM) describes the risk-return trade-off for securities. It…

Q: NoGrowth Corporation currently pays a dividend of $0.49 per quarter, and it will continue to pay…

A: As per dividend discount model, the current stock price is

Q: If we know that a firm has a net profit margin of 4.3 %, total asset turnover of 0.77, and a…

A: The computation of ROE is as follows: Hence, the return on investment is 4.50%

Q: Which of the following best describes the market capitalization of a company? Select one: a. it…

A: Market capitalization refers to the value of the outstanding shares in the company which is…

Q: Maynard Steel plans to pay a dividend of $2.82 this year. The company has an expected earnings…

A: The dividend payout rate refers to the rate to be computed by taking the yearly dividend per share…

Question

Anle Corporation has a current stock price of $19.71 and is expected to pay a dividend of $0.95 in one year. Its
expected stock price right after paying that dividend is $21.84.
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.)
b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by
capital gain?
The dividend yield is%. (Round to two decimal places.)
The capital gain is%. (Round to two decimal places.)

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

SEE SOLUTION Check out a sample Q&A here

Step 1: Introduction

VIEW

Step 2: Computation of the cost of equity (r)

VIEW

Step 3: Computation of Dividend yield

VIEW

Step 4: Computation of capital gain yield

VIEW

Solution

VIEW

Step by step

Solved in 5 steps with 3 images

SEE SOLUTION Check out a sample Q&A here

Knowledge Booster

Learn more about

Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, finance and related others by exploring similar questions and additional content below.

Similar questions

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.)
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?
Anle Corporation has a current stock price of 21.36 and is expected to pay a dividend of $1.15 in one year. Its expected stock price right after paying that dividend is $23.13. What is Anle's equity cost of capital? How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain? What is Anle's equity cost of capital? (Round to two decimal places.)
Anle Corporation has a current stock price of $19.49 and is expected to pay a dividend of $1.25 in one year. Its expected stock price right after paying that dividend is $21.26. 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?
Anle Corporation has a current price of $16, is expected to pay a dividend of $1 in one year, and its expected price right after paying that dividend is $24. a. What is Anle's expected dividend yield? b. What is Anle's expected capital gain rate? c. What is Anle's equity cost of capital?
Anle's Corporation has a current price of $12, is expected to pay a dividend of $1 in one year, and its expected price right after paying that dividend is $16. What is Anle's expected dividend yield? What is Anle's expected capital gain rate? What is Anle's equity cost of capital? a. What is Anle's expected dividend yield? Anle's expected dividend yield is b. What is Anle's expected capital gain rate? Anle's expected capital gain rate is c. What is Anle's equity cost of capital? Anle's equity cost of capital is %. (Round to two decimal places.) %. (Round to two decimal places.) %. (Round to two decimal places.)
Anle Corporation has a current price of $29, is expected to pay a dividend of $1 in one year, and its expected price right after paying that dividend is $30. a. What is Anle's expected dividend yield? b. What is Anle's expected capital gain rate? c. What is Anle's equity cost of capital? a. What is Anle's expected dividend yield? Anle's expected dividend yield is%. (Round to two decimal places.) b. What is Anle's expected capital gain rate? Anle's expected capital gain rate is %. (Round to two decimal places.) c. What is Anle's equity cost of capital? Anle's equity cost of capital is%. (Round to two decimal places.)
Anle Corporation has a current price of $20, is expected to pay a dividend of $1 in one year, and its expected price right after paying that dividend is $22. What is Anle’s expected dividend yield? What is Anle’s expected capital gain rate? What is Anle’s equity cost of capital?
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.)
All Metals, Inc. has a current stock price of $35 share, is expected to pay a dividend of $1.20 in one year, and its expected price right after paying that dividend is $33. What is Rearden's expected dividend yield?What is Rearden's Expected capital gains yield?What is Rearden's equity cost of capital?
What is it's dividend yield on this financial accounting question?
Krell Industries has a share price of $22.32 today. If Krell is expected to pay a dividend of $1.07 this year and its stock price is expected to grow to $23.71 at the end of the year, what is Krell's dividend yield and equity cost of capital? a) The dividend yield is ______%. (Round to one decimal place.) b) Capital Gain Rate_____ c) The total return ____%