Problem 11IntroA stock just paid an annual dividend of $7.7. The dividend is expected to grow by 3% peryear for the next 4 years. In 4 years, the P/E ratio is expected to be 16 and the payout ratioto be 60%.The required rate of return is 8%.Part 1What is the intrinsic value of the stock?0+ decimalsSubmit

ParticularsValuesAnnual dividend$7.70Required rate of return8%Growth rate3%Expected P/E…

Answered: Problem 11 Intro A stock just paid an…

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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REVIEW AND SELF-TEST PROBLEMS 12.1 Calculating the Cost of Equity Suppose stock in Boone Corporation has a beta of .90. The market risk premium is 7 percent, and the risk-free rate is 8 percent. Boone's last dividend was $1.80 per share, and the dividend is expected to grow at 7 percent indefinitely. The stock currently sells for $25. What is Boone's cost of equity capital? (See Problem 1.)
17 ts 03:39:08 E-Eyes.com just issued some new 20/20 preferred stock. The issue will pay an annual dividend of $28 in perpetuity, beginning 17 years from now. If the market requires a return of 4.2 percent on this investment, how much does a share of preferred stock cost today? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Stock price
11. I need help with finance home work question asap please A stock that currently sells for $120 has EPS of $20.75. What is the annual rate of return on this stock if the company is expected to pay a dividend per share in the amount of $18 each year forever?
Question 4/2 You are an experienced investor in the securities market and you have established an investment portfolio of two blue chips five years ago: Diamond shares with current market value of $235,000 and Platinum shares with current market value of $355,000. Required: Assume that you bought 2000 of Platinum shares in your portfolio for a price of $95 each, the dividend paid for this stock is $3/stock each year. Calculate the total return of this investment after five years?
Q17 A firm does not pay a dividend. It is expected to pay its first dividend of $0.20 per share in three years. This dividend will grow at 11 percent indefinitely. Use a 12 percent discount rate.Compute the value of this stock. (Round your answer to 2 decimal places.) STOCK VALUE
Problem 10-21 Arithmetic and Geometric Returns [LO 1] A stock has had the following year-end prices and dividends: Year Price Dividend $ 64.83 71.70 1 $ .70 3. 77.50 .75 4 63.77 .81 74.11 .90 84.75 .97 What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Arithmetic average return Geometric average return %
Question 1 0 out of 2 points The expected return on the market is 12.07%, the risk-free rate is 4.94%, and the tax rate is 22.00%. Semper Fun Sports has 300,000 common shares outstanding that are priced at $41.90 per share and have an expected return of 16.99% and an expected real return of 14.96%. Last year, Semper Fun Sports common stock had a return of 11.04%. The company also Finally, the company has 10,000 bonds outstanding with a coupon 400,000 shares of preferred stock outstanding that are priced at $15.65 per share and have an expected return of 13.24% and an expected real return of 11.00%. Last year, Semper Fun Sports preferred stock had a return of 8.92%. rate of 9.50%, yield-to-maturity of 4.35%, current yield of 8.79%, face value of $1,000.00, and price of $1,300.00. What is the weighted average cost of capital for Semper Fun Sports?
02 The risk-free rate is 3.64% and the market risk premium is 7.60%. A stock with a 0 of 0.90 just paid a dividend of $2.51 The dividend is expected to grow at 23.42% for five years and then grow at 4.18% forever. What is the value of the stock? Submit Answer format: Currency: Round to: 2 decimal places Attempts F
Esc Chapter 12 Practice Problems 1. Suppose a stock had an initial price of $77 per share, paid a dividend of $1.35 per share during the year, and had an ending share price of $83. Compute the percentage total return. Q Search 1 Q A N @ 2 W S F2 X # 3 E F3 D $ 4 R F DII % 5 F5 T G * F6 A 6 Y B * H & 7 PrtScn U N * 8 Home 1 M 9 Page K End о F10 ) 0 PgUp F11 P
Problem 12-16 CAPM and Expected Return (LO2) A share of stock with a beta of 0.82 now sells for $58. Investors expect the stock to pay a year-end dividend of $2. The T-bill rate is 5%, and the market risk premium is 8%. a. Suppose investors believe the stock will sell for $60 at year-end. Calculate the opportunity cost of capital. Is the stock a good or bad buy? What will investors do? b. At what price will the stock reach an “equilibrium” at which it is perceived as fairly priced today? Complete this question by entering your answers in the tabs below. Required A Required B Suppose investors believe the stock will sell for $60 at year-end. Calculate the opportunity cost of capital. Is the stock a good or bad buy? What will investors do? Note: Do not round intermediate calculations. Round your opportunity cost of capital calculation as a percentage rounded to 2 Opportunity cost of capital The stock is a buy and the investors Show more
Problem 12-14 Calculating Returns and Variability (LO1) You find a certain stock that had returns of 10.3 %, -17.3%, 22.3%, and 18.3% for four of the last five years. The average return of the stock over this period was 11.6%. Assume the face value of the bond is $1,000. What was the stock's return for the missing year? (Round the final answer to 1 decimal place.) Stock's return 25.5 % * What is the standard deviation of the stock's return? (Do not round intermediate calculations. Round the final answer to 2 decimal places.) Standard deviation 17.4 %
Problem 9.16 The preferred stock of Axim Corp. is currently selling at $48.95. If the required rate of return is 11.6 percent, what is the dividend paid by this stock? (Round answer to 2 decimal places, e.g. 15.25.) Dividend paid

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