Financial accounting 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%

Capital Gains YieldThe necessary return on a stock refers to the entire return that an investor…

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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A company currently pays a dividend of $3 per share (D0 = $3). 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 8% thereafter. The company's stock has a beta of 1.3, the risk-free rate is 8%, and the market risk premium is 4%. What is your estimate of the stock's current price? Do not round intermediate calculations. Round your answer to the nearest cent.
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
Deluxe Company expects to pay a dividend of $2 per share at the end of year 1. $3 per share at the end of year 2. and then be sold for $32 per share at the end of year 2. If the required rate of return on the stock is 15%, what is the current value of the stock?
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.
Stoneheart Group is expected to pay a dividend of $2.89 next year. The company's dividend growth rate is expected to be 4.1 percent indefinitely and investors require a return of 10.3 percent on the company's stock. What is the stock price? Multiple Choice $46.61 $28.06 $41.95 $44.28 $48.52
3. Mando Inc. next year earnings per share is expected to be $7. Its return on equity is 20%, which is expected to remain for the foreseeable future. The market required return is 12%. a. Mando Inc. maintains an 80% dividend payout ratio. Calculate the Mando Inc. stock price and NPVGO. b. Calculate Mando Inc. stock price and NPVGO if Mando Inc. management chooses an 95% dividend payout policy.
Walter Utilities is a dividend-paying company and is expected to pay an annual dividend of $1.45 at the end of the year. Its dividend is expected to grow at a constant rate of 9.00% per year. If Walter's stock currently trades for $21.00 per share, what is the expected rate of return? Group of answer choices 15.90% 9.00% 18.00% 16.84%
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%
Shamas Famous Restaurants expects to pay a common stock dividend of $1.50 per share next year (d1). Dividends are expected to grow at a 4% rate for the foreseeable future. Shamas’ common stock is selling for $18.50 per share, and issuance costs are $3.50 per share. What is Shamas cost of external equity? 12.11% 20.59% 10.00% 14.00%

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