? he historical dividend yield of a stock is 5.21% and the stock's cost of capital is 12.58%, what is its expected growth rate in percentage terms to 2 decimal places? dollars and cents, what is the maximum you would pay per share for a company that generated profits of $7.44 per share on its 438.75 million shares from which it paid a vidend of $4.66 per share and has equity capital of $37.8bn if its cost of capital is 16.55%? dollars and cents, what is the maximum you would pay per share for a company that: • generated profits of $6.774 per share, • had 765million shares on issue, that had paid a dividend of $4.695 per share, which according to its accounts has equity capital of $13.45bn, • when its standard deviation is 37.11%, . when the standard deviation of the market is 18.94%, • when the return of the market is 16.65%, • when the stock's correlation with the market is 0.87, and • the risk-free rate of return is 5.25%? dollars and cents, what is the maximum price you would pay per share for shares of a company that: o is expected to increase operating cash flow annually by 6% from its historical level of $25m, o where capital expenditure is 7% of the previous year's operating cash flow, o when your estimated value of the company in the fourth year, which is when you planned to sell your shares in the company is $980m,
? he historical dividend yield of a stock is 5.21% and the stock's cost of capital is 12.58%, what is its expected growth rate in percentage terms to 2 decimal places? dollars and cents, what is the maximum you would pay per share for a company that generated profits of $7.44 per share on its 438.75 million shares from which it paid a vidend of $4.66 per share and has equity capital of $37.8bn if its cost of capital is 16.55%? dollars and cents, what is the maximum you would pay per share for a company that: • generated profits of $6.774 per share, • had 765million shares on issue, that had paid a dividend of $4.695 per share, which according to its accounts has equity capital of $13.45bn, • when its standard deviation is 37.11%, . when the standard deviation of the market is 18.94%, • when the return of the market is 16.65%, • when the stock's correlation with the market is 0.87, and • the risk-free rate of return is 5.25%? dollars and cents, what is the maximum price you would pay per share for shares of a company that: o is expected to increase operating cash flow annually by 6% from its historical level of $25m, o where capital expenditure is 7% of the previous year's operating cash flow, o when your estimated value of the company in the fourth year, which is when you planned to sell your shares in the company is $980m,
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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Transcribed Image Text:a. In dollars and cents, what is the fair value of a stock that has just paid a dividend of $12.54, which is expected to grow indefinitely at 1.88%pa, and that has a cost of capital of 17.5
5%?
b. If the historical dividend yield of a stock is 5.21% and the stock's cost of capital is 12.58%, what is its expected growth rate in percentage terms to 2 decimal places?
c. In dollars and cents, what is the maximum you would pay per share for a company that generated profits of $7.44 per share on its 438.75 million shares from which it paid a
dividend of $4.66 per share and has equity capital of $37.8bn if its cost of capital is 16.55%?
d. In dollars and cents, what is the maximum you would pay per share for a company that:
• generated profits of $6.774 per share,
• had 765million shares on issue,
• that had paid a dividend of $4.695 per share,
• which according to its accounts has equity capital of $13.45bn,
●
when its standard deviation is 37.11%,
when the standard deviation of the market is 18.94%,
• when the return of the market is 16.65%,
• when the stock's correlation with the market is 0.87, and
• the risk-free rate of return is 5.25%?
e. In dollars and cents, what is the maximum price you would pay per share for shares of a company that:
o is expected to increase operating cash flow annually by 6% from its historical level of $25m,
o where capital expenditure is 7% of the previous year's operating cash flow,
o when your estimated value of the company in the fourth year, which is when you planned to sell your shares in the company is $980m,
o if the weighted average cost of capital of the company is 12.77%,
o its value of debt is $325m, and
o there are 40m shares on issue?
f. What is the P/E ratio for a stock which has a payout ratio of 61.55%, a return on equity of 18.55% and a cost of capital of 13.25%?
(2
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