Block stock sells for $31 per share. It just paid a dividend of $1.14 per share. Thecompany has a growth rate of 4% annually. The return of market is 6%. T - billshave a rate of 2.5%. The bond - yield risk premium is 4%. Block's beta is 1.17.What is the cost of equity for Block?

The cost of equity is the required rate of return based on the expectation of shareholders based on…

Block stock sells for $31 per share. It just paid a dividend of $1.14 per share. The company has a growth rate of 4% annually. The return of market is 6%. T - bill have a rate of 2.5%. The bond - yield risk premium is 4%. Block's beta is 1.17 What is the cost of equity for Block?

Block stock sells for $31 per share. It just paid a dividend of $1.14 per share. The company has a growth rate of 4% annually. The return of market is 6%. T - bill have a rate of 2.5%. The bond - yield risk premium is 4%. Block's beta is 1.17 What is the cost of equity for Block?

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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Westlake Company's stock has an estimated beta of 1.5 and the company just paid a dividend of $2 per share. Westlake is expected to grow its dividends at 5% p.a. indefinitely. The risk-free interest rate is 4% per annum, and the estimated market risk premium is 6%. 1. Use the CAPM to calculate Westlake' required rate of return. 2. Estimate Westlake's intrinsic value per share.
Victoria Company's beta is exactly 1.2, and the market risk premium is 9%, with a risk-free rate of 6%. The company's most recent dividend was $9 per share, and the dividend is expected to grow at 12% for the next three years and then grow at 5% per year indefinitely. 1. What would be Victoria's shares' intrinsic value per share? 2. What would be the dividend yield? 3. If all the expectations stay the same as stated, what would the share price be a year from now? What would be your capital gain if you owned a share for the year? Show that this gain is consistent with the expected dividend yield calculated above.
A firm just paid a dividend of $6.02. The dividend is expected to grow at a constant rate of 5.02% forever and the required rate of return is 17.32%. What is the value of the stock?
Ginger Industries stock has a beta of 1.33. The company just paid a dividend of $.83, and the dividends are expected to grow at 5.3 percent. The expected return on the market is 11.8 percent, and Treasury bills are yielding 5.3 percent. The most recent stock price is $83.00. Calculate the cost of equity using the dividend growth model method. Calculate the cost of equity using the SML method.
Riyad Bank has just paid its annual dividend of SAR1.50 per share. The dividend is expected to grow at a constant rate of 7% indefinitely. The beta of Riyad Bank stock is 1.2, the risk-free rate is 6%, and the market risk premium is 9%. - What Is the intrinsic value of the stock?
Suppose the risk-free rate is 3.91% and an analyst assumes a market risk premium of 6.52%. Firm A just paid a dividend of $1.11 per share. The analyst estimates the β of Firm A to be 1.20 and estimates the dividend growth rate to be 4.27% forever. Firm A has 264.00 million shares outstanding. Firm B just paid a dividend of $1.83 per share. The analyst estimates the β of Firm B to be 0.70 and believes that dividends will grow at 2.86% forever. Firm B has 197.00 million shares outstanding. What is the value of Firm B? Answer format: Currency: Round to: 2 decimal places.
AAA's stock has a required rate of return = 11.50%. It is selling for $25/ share. It's dividend will grow at a constant rate of 7.00%. How much is the last dividend, D0? $0.95 $1.05 $1.16 $1.27
A stock is selling for $80 in the market. The company’s beta is 1.5, the market risk premium (rM - rF) is 6%, and the risk-free rate is 2%. The most recent dividend paid is D0 = $2 and dividends are expected to grow at a constant rate g. What’s the dividend growth rate g for this stock? find the stock’s capital gain yield. 8.29% 4.19% 7.68% 7.81%
Stock in Daenerys Industries has a beta of 0.92. The market risk premium is 10 percent, and T-bills are currently yielding 4.5 percent. The company's most recent dividend was $1.9 per share, and dividends are expected to grow at a 6 percent annual rate indefinitely. If the stock sells for $30 per share, what is your best estimate of the company's cost of equity?
EEE company just paid a dividend of $.55 per share and the dividend is expected to go to constant rate of 4.75% per year in the future the companies beta is 1.3 the market is premium is 5.10 and the risk-free rate is 2.25% what is the company's current stock price? A-15.74 B-21.56 C-16.49 D-13.95 E-33.94
Suppose the risk-free rate is 2.61% and an analyst assumes a market risk premium of 6.65%. Firm A just paid a dividend of $1.19 per share. The analyst estimates the ẞ of Firm A to be 1.31 and estimates the dividend growth rate to be 4.79% forever. Firm A has 288.00 million shares outstanding. Firm B just paid a dividend of $1.89 per share. The analyst estimates the ẞ of Firm B to be 0.87 and believes that dividends will grow at 2.28% forever. Firm B has 196.00 million shares outstanding. What is the value of Firm B? Submit Answer format: Currency: Round to: 2 decimal places. Show Hint
Assume that Company A is in stable growth. Its current earnings are expected to grow 6% a year in perpetuity, and its stock has a beta of 0.85. If the current Treasury bond rate is 4%, the current estimate of the market risk premium is 6%, and the stock is trading at a P/E ratio of 9.5, estimate Company A's return on equity. The return on equity is?

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