General Accounting Question please answer Excelor stock is expected to pay $3.00 per share asits next annual dividend. The firm has a policy ofincreasing the dividend by 11.0 percent annually.The stock has a market price of $13.65 and a betaof 2.8. The market risk premium is 8.56 percent andthe risk-free rate is 4.90 percent. What is the cost ofequity?a. 31.31 percentb. 30.27 percentc. 30.92 percentd. 29.84 percent

Step 1: Define Cost Of EquityThe cost of equity is a component to determine the firm's weighted…

Answered: Excelor stock is expected to pay $3.00…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 2P

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A stock is trading at $80 per share. The stock is expected to have a yearend dividend of $4 per share (D1 = $4), and it is expected to grow at some constant rate, g, throughout time. The stock’s required rate of return is 14% (assume the market is in equilibrium with the required return equal to the expected return). What is your forecast of gL?
Annual dividend is $2.97 per share of Stock. The real risk free rate of return is 3.25%. The expected real rate of return on the market is 7.00 percent. The company's beta, B is 1.2. a. Based on this information, what is the percentage of the risk premium on the stock market? b. According to CAPM, what is the appropriate real discount rate?
a) Firm A has systematic risk beta and ROE (return on equity) equal 0.8 and 7% respectively. The risk-free rate is 3% and the market risk premium is 6%. If firm A's next year EPS (earnings per share) and DPS (dividend per share) are £0.5 and £0.2 respectively, what is the firm's expected price-earnings multiple? How much dividend should the firm declare if it is to enjoy a higher expected PE (price-to-earnings) valuation? b) What are the pros and cons of the PE approach to valuation?
Suppose the risk-free rate (RF) is 3.64% and an analyst assumes a market risk premium (Rm - Rf) of 7.50% . Firm A just paid a dividend of $1.05 per share (i.e. 1.05). The analyst estimates the beta of Firm A to be 1.49 and estimates the dividend growth rate to be 4.13% forever. Firm A has 2.2 million shares outstanding . What is the market value of the equity of Firm A?
Suppose the risk-free rate is 1.15% and an analyst assumes a market risk premium of 6.07%. Firm A just paid a dividend of $1.14 per share. The analyst estimates the β of Firm A to be 1.44 and estimates the dividend growth rate to be 4.17% forever. Firm A has 272.00 million shares outstanding. Firm B just paid a dividend of $1.68 per share. The analyst estimates the β of Firm B to be 0.77 and believes that dividends will grow at 2.55% forever. Firm B has 185.00 million shares outstanding. What is the value of Firm B?
You have assigned the following values to these three firms: Upcoming Dividend $0.50 Estee Lauder Kimco Realty Nordstrom Price $36.00 75.00 11.00 1.58 2.00 Estee Lauder required return Kimco Realty required return Nordstrom required return Assume that the market portfolio will earn 17.20 percent and the risk-free rate is 8.20 percent. Compute the required return for each company using both CAPM and the constant-growth model. (Do not round intermediate calculations and round your final answers to 2 decimal places.) CAPM Growth 11.40% 17.00 8.80 % % % Beta 0.92 1.28 1.24 Constant-Growth Model % % %
MNO Corporation is expected to issue ₱10 dividend next yearwherein the implied growth is 4%. The prevailing risk free rate is 3.5% and the market risk premium is 6%. The calculated beta of MNO Corporation is 0.90. The stock price would be closest to:a. ₱ 189.09 b. ₱ 204.08 c. ₱ 231.11d. ₱ 173.91 e. ₱ 180.87 f. ₱ 105.26
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.
Suppose the risk-free rate is 3.62% and an analyst assumes a market risk premium of 6.27%. Firm A just paid a dividend of $1.04 per share. The analyst estimates the β of Firm A to be 1.33 and estimates the dividend growth rate to be 4.82% forever. Firm A has 268.00 million shares outstanding. Firm B just paid a dividend of $1.97 per share. The analyst estimates the β of Firm B to be 0.79 and believes that dividends will grow at 2.81% forever. Firm B has 185.00 million shares outstanding. What is the value of Firm A?
Suppose the risk-free rate is 2.67% and an analyst assumes a market risk premium of 6.91%. Firm A just paid a dividend of $1.21 per share. The analyst estimates the β of Firm A to be 1.45 and estimates the dividend growth rate to be 4.46% forever. Firm A has 295.00 million shares outstanding. Firm B just paid a dividend of $1.75 per share. The analyst estimates the β of Firm B to be 0.89 and believes that dividends will grow at 2.83% forever. Firm B has 188.00 million shares outstanding. What is the value of Firm A? Answer format: Currency: Round to: 2 decimal places.
Your broker has recommended that you purchase stock in Beacan, Inc. Beacan recently paid its annual dividend ($14.00). The firm also boasts an ROE of 15%, of which 50% is paid as dividends. Analysts estimate that the stock has a beta of 0.79. The current risk-free rate is 2.00% and the market return (RM) is 11.10%. Assuming that CAPM holds, what is the intrinsic value of this stock?
Given the following information for the stock of Foster Company, calculate the risk premium on its common stock. Current price per share of common stock $58.14 Expected dividend per share next year $1.95 Constant annual dividend growth rate 7.5% Risk-free rate of return 7.2% a. The risk premium on Foster stock is ___ % Just need that a answered

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