Required information Assume you pay the reduced amount of $4,405 for a corporate stock that has a market value of $5000. The stock pays an annual dividend of 4.5% of its market value. Since this is primarily a dividend-paying stock, you estimate that you will sell the stock 10 years from now at the current $5000 market value. Identify the spreadsheet function that displays the present worth now (year O) of the original purchase price, dividends, and proceeds when the stock is sold after 10 years, if i= 7.1% per year.

Required information Assume you pay the reduced amount of $4,405 for a corporate stock that has a market value of $5000. The stock pays an annual dividend of 4.5% of its market value. Since this is primarily a dividend-paying stock, you estimate that you will sell the stock 10 years from now at the current $5000 market value. Identify the spreadsheet function that displays the present worth now (year O) of the original purchase price, dividends, and proceeds when the stock is sold after 10 years, if i= 7.1% per year.

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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I bought ANF stock on 8/14/2018 for $29.26 and then collected $0.20 dividends on 09/06/2018 and then sold my stock on 11/30/2018 for $20.91. What has been my annualized return from this transaction? (Please use IRR) -67.07% -45.20% +3.25% -78.45%
Lahhey Publishing wishes to estimate the value of its outstanding preferred stock. The preferred stock has a RM50 par value and pays an annual dividend of RM7.50 per share and currently earning an 8% annual rate of return. (i) Calculate the market value of the outstanding preferred stock. (ii) If an investor purchases the preferred stock at the value calculated in part (a), how much does she gain or lose per share if she sells the stock when the required return on preferred stock has fallen to 6%. Explain.
An investor purchases a stock for $50 and over the next year, receives a $0.75 dividend. At the end of the year, the stock is priced at $53. In the second year, the stock pays a $1.00 dividend and at the end of the year the stock is priced at $51. a. Compute the dollar return for each year. b. Compute the percentage return for each year.
You are considering purchasing a share of preferred stock with the following characteristics: par value = $100 dividend rate = 12% per year payment schedule = quarterly maturity date = required rate of return = 6% per year current market price = $135 per share Based on this information, answer the following: A. What is the dollar amount of the quarterly dividend on this stock? B. Using the Discounted Cash Flow Method, what is the dollar value of this stock? C. Using the Discounted Cash Flow Method, what is the annual expected return for this stock? D. Based on your answer to part B, should you invest in the stock? Why or why not? E.…
You purchase 100 shares of stock for $40 a share. The stock pays a $2 per share dividend at year-end. a. What is the rate of return on your investment if the end-of-year stock price is (i) $38; (ii) $40; (iii) $44? (Leave no cells blank - be certain to enter "0" wherever required. Enter your answers as a whole percent.) Stock Price Rate of Return 38 40 % 44 %
Bha
XYZ's stock price and dividend history are as follows: Year Beginning-of-Year Price 2019 2020 2021 2022 $88 108 78 88 Dividend Paid at Year-End $4 An investor buys three shares of XYZ at the beginning of 2019, buys another two shares at the beginning of 2020, sells one share at the beginning of 2021, and sells all four remaining shares at the beginning of 2022 Arithmetic average rate of return Geometric average rate of return Required: a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Round your year-by-year rates of return and final answers to 2 decimal places. Do not round other calculations.) Dollar-weighted rate of return 4 4 4 % % b. What is the dollar-weighted rate of return? (Hint Carefully prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2019, to January 1, 2022. If your calculator cannot calculate IRR, you will have to use trial and error or a spreadsheet program.) (Round your…
XYZ stock price and dividend history are as follows: Beginning-of-Year Dividend Paid at Year 2018 2019 Price $ 140 159 132 137 2020 2021 Year-End $ 4 4 4 4 An investor buys five shares of XYZ at the beginning of 2018, buys another three shares at the beginning of 2019, sells one share at the beginning of 2020, and sells all seven remaining shares at the beginning of 2021. Required: a. What are the arithmetic and geometric average time-weighted rates of return for the investor? (Do not round intermediate calculations. Round your answers to 2 decimal places.) Arithmetic time-weighted average returns Geometric time-weighted average returns % % b-1. Prepare a chart of cash flows for the four dates corresponding to the turns of the year for January 1, 2018, to January 1, 2021. (Negative amounts should be indicated by a minus sign.) Date Cash Flow 01/01/2018 01/01/2019 01/01/2020 01/01/2021
Bha
1. Lahhey Publishing wishes to estimate the value of its outstanding preferred stock. The preferred stock has a RM50 par value and pays an annual dividend of RM7.50 per share and currently earning an 8% annual rate of return. A. Calculate the market value of the outstanding preferred stock. B. If an investor purchases the preferred stock at the value calculated in part (a), how much does she gain or lose per share if she sells the stock when the required return on preferred stock has fallen to 6%. Explain.
Oweninc has a current stock price of $13.70 and is expected to pay a $1.00 dividend in one year. If Oweninc's equity cost of capital is 11%, what price would Owenlnc's stock be expected to sell for immediately after it pays the dividend? OA. $11.37 OB. $15.21 OC. $9.95 OD. $14.21 www
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