Question 7 FLAG QUESTION Ice Boat Adventures (IBA) has 10,000,000 shares outstanding and a market capitalization of $525,000,000. What is IBA's equity cost of capital if you expect the share price in one year to be $60.50 after paying a dividend of $3.50? (1 (express as a % rounded to 1 digit after the decimal: x.x%) Answers 1 - 1

Question 7 FLAG QUESTION Ice Boat Adventures (IBA) has 10,000,000 shares outstanding and a market capitalization of $525,000,000. What is IBA's equity cost of capital if you expect the share price in one year to be $60.50 after paying a dividend of $3.50? (1 (express as a % rounded to 1 digit after the decimal: x.x%) Answers 1 - 1

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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Question content area top Part 1 Assume Gillette Corporation will pay an annual dividend of $ 0.66 one year from now. Analysts expect this dividend to grow at 11.2 % per year thereafter until the fifth year. Thereafter, growth will level off at 1.6 % per year. According to the DDM, what is the value of a share of Gillette stock if the firm's equity cost of capital is 8.3 % ? Question content area bottom Part 1 The value of Gillette's stock is $ enter your response here. (Round to the nearest cent.
Problem 9-8 Valuing Preferred Stock Fegley, Incorporated, has an issue of preferred stock outstanding that pays a dividend of $6.95 every year in perpetuity. This issue currently sells for $90 per share. What is the required return? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
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Problem 4 (Allocation of Cash Dividends to Preference and Ordinary Shareholders) The Company has the same capital structure (except for retained earnings) for the past five year, see details below: 6% Preference Share Capital, 80,000 shares issued and outstanding, P 50 par P4,000,000 Ordinary Share Capital, 200,000 shares issued and outstanding, P 30 par 6,000,000 Retained Earnings 5,000,000 No dividends were paid prior to 2020 for two years. On December 10, 2020, the Company declared P 1,500,000 as cash dividends to shareholders of record of December 21, 2020, payable on January 5, 2021. Requirements: Prepare all the necessary journal entries to record the dividend transactions. Allocate the dividends between ordinary shareholders and preference shareholders if: Case A. Preference share capital is NON-CUMULATIVE and…
Problem 4 (Allocation of Cash Dividends to Preference and Ordinary Shareholders) The Company has the same capital structure (except for retained earnings) for the past five year, see details below: 6% Preference Share Capital, 80,000 shares issued and outstanding, P 50 par P4,000,000 Ordinary Share Capital, 200,000 shares issued and outstanding, P 30 par 6,000,000 Retained Earnings 5,000,000 No dividends were paid prior to 2020 for two years. On December 10, 2020, the Company declared P 1,500,000 as cash dividends to shareholders of record of December 21, 2020, payable on January 5, 2021. Requirements: Prepare all the necessary journal entries to record the dividend transactions. Allocate the dividends between ordinary shareholders and preference shareholders if: Case A. Preference share capital is NON-CUMULATIVE and…
QUESTION 3 CER Corporation has 8.75 million shares of common stock outstanding, 215,000 sharesof RM6 annual dividend preferred stock outstanding, and 105,000 of 7.5% semi-annualbond outstanding. The common stock is currently sells for RM34 per share and has abeta of 1.25, the preferred stock currently sells for RM91 per share, and the bonds have15 years to maturity and sell for 93% of par. The market risk premium is 8.5%, T-bills areyielding 5%, and corporate tax rate is 35%. Calculate the following:(a) Firm’s market value capital structure.(b) Cost of equity.(c) Cost of preferred stock Thank you
please do question 14 d and question 9 a and b
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Question 5 FLAG QUESTION 1 Scooter Madness (SM) has 10,000 shares outstanding and is expected to have Net Income of $70,000 in year 1. SM expects to retain 35% of its earnings to invest in projects at the end of year 1. If the expected share price 1 year from today after any dividend issued is $65 and SM's return on equity capital is 16%, what would you expect the share price to be today? (round to the nearest cent: $x.xx) Answers 1-1 1. VERSION 2M.6.4 Previous
Question 2 You have been appointed as a financial consultant by the directors of Baron Holdings. They require you to determine the cost of capital of the company. The following information is available on the capital structure of the company: ü 1 500 000 ordinary shares, with a market price of R3 per share. The latest dividend declared was 86 cents per share. A dividend growth of 15% was maintained for the past 5 years. ü 1 000 000 11%, R1 preference shares, with a market value of R3 per share. ü R1 000 000 9%, debentures due in 7 years and the current yield-to-maturity is 10%. Note that the current price of the debenture is R951 356 ü R700 000 14%, bank loan, due in December 2021. Additional information: - The company has a tax rate of 30%. - The beta of the company is 1.7, a risk free rate of 5% and the return on the market is 14%. Required: 2.1 Calculate the weighted average cost of capital. Use the Gordon Growth Model to calculate the cost of equity 2.2 Calculate the cost of…

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