Correct answer? ? Accounting question Global Tech Innovations (GTI) is currently trading at $60 per share. The companyrecently paid an annual dividend of $2.40, and its dividend is expected to grow at3% annually. Investors require a 10% return on this stock.Calculate the dividend yield and capital gains yield.Options:a. 3%; 7%b. 4%; 6%c. 5%; 5%d. 6%; 4%e. 7%; 3%

Step-by-Step Solution to Calculate Dividend Yield and Capital Gains Yield 1. Understanding the Key…

Answered: Global Tech Innovations (GTI) is…

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter12: The Cost Of Capital

Section: Chapter Questions

Problem 19P

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Assume that IWT has completed its IPO and has a $112.5 million capital budget planned for the coming year. You have determined that its present capital structure (80% equity and 20% debt) is optimal, and its net income is forecasted at $140 million. Use the residual distribution approach to determine IWT’s total dollar distribution. Assume for now that the distribution is in the form of a dividend. Suppose IWT has 100 million shares of stock outstanding. What is the forecasted dividend payout ratio? What is the forecasted dividend per share? What would happen to the payout ratio and DPS if net income were forecasted to decrease to $90 million? To increase to $160 million? In general terms, how would a change in investment opportunities affect the payout ratio under the residual distribution policy? What are the advantages and disadvantages of the residual policy? (Hint: Don’t neglect signaling and clientele effects.)
Financial accounting
LotsaDough's common stock is expected to pay a dividend of $1.20 next year, with a forecasted constant growth rate of dividends of 7%. The stock is priced at $12.50. What is LotsaDough's cost of common equity using the DDM/DGM approach? Group of answer choices 9.6% 12.6% 16.6% 19.6%
What is the cost of equity?
Panko corporation is expected to have free cash flow to equity (FCFE) of 1.5€ per share in year 1, 2€ per share in year 2, and 2.5€ per share in year 3. After year 3, FCFE per share is expected to grow by 10% per year to perpetuity. Considering that the cost of equity is 12%, Panko's stock should be worth: Select one: O O O O O a. 74.38€ b. 45.28€ c. 35.67€ d. None of the proposed answers is correct e. 52.25€
Yharnam Co. is expected to pay a dividend of D1 = $1.40 per share at the end of the year, and that dividend is expected to grow at a constant rate of 5.00% per year in the future. The company's beta is 1.2, the Market Risk Premium is 6.25%, and the risk-free rate is 3.90%. What is the company's current stock price? Group of answer choices 24.06 18.59 28.00 22.40 21.88
Birkin Systems is expected to pay a dividend of D1 = $2.00 per share at the end of the year, and that dividend is expected to grow at a constant rate of 5.00% per year in the future. The company's beta is 1.2, the Market Risk Premium is 6.00%, and the risk-free rate is 4.00%. What is the company's current stock price? (Ch. 9) Group of answer choices 40.00 27.42 32.26 35.48 33.33
Assume that a firm can issue preferred stock that has a $70 par value and pays a 15.0% annual dividend each year. The firm's investment bankers believe that investors will be willing to pay $84.00 per share and that flotation costs will be equal to $8.45 per share. Given this information, determine the difference between the investor's required rate of return, and the firm's cost of preferred stock. O 1.969%. O 1.398% O 1.683% O 2.541% O 2.224%
A company currently pays a dividend of $4 per share ( DO =\$ 4). It is estimated that the company's dividend will grow at a rate of 24% per year for the next 2 years, and then at a constant rate of 6% thereafter. The company's stock has a beta of 1.5, the risk - free rate is 8%, and the market risk premium is 4.5%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.
The stock of Melody Music City is selling for $37.50 and pays a current annual dividend of $1.10. What is the implied growth rate of dividends for this firm (assume dividends are expected to grow at a constant rate) if an investor's required rate of return is 14 percent? A)11.07% B)14.0% C)11.4% D)10.75%
The current dividend, D0, of the stock of Sun Devil Corporation is $3 per share. Under present conditions, this dividend is expected to grow at a rate of 4 percent annually for the foreseeable future. The beta of Sun Devil stock is 1.4. The risk-free rate of return is 7 percent, and the expected market rate of return is 13 percent. Round your answers to the nearest cent. At what price would you expect Sun Devil common stock to sell?$ If the risk-free rate of return declines to 5 percent, what will happen to Sun Devil’s stock price? (Assume that the expected market rate of return remains at 13%, the dividend growth rate remains at 4%, and D0 remains at $3.)$ Sun Devil’s management is considering acquisitions in the machine tool industry. Management expects the firm’s beta to increase to 1.6 as a result of these acquisitions. The dividend growth rate is expected to increase to 6 percent annually. Would you recommend this acquisition program to management? (Assume the same…
Lifecycle Motorcycle Company is expected to pay a dividend in year 1 of $2.00, a dividend in year 2 of $3.00, and a dividend in year 3 of $4.00. After year 3, dividends are expected to grow at the rate of 4% per year. An appropriate required return for the stock is 13%. Using the multistage DDM, the stock should be worth_______

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