D(Solving a comprehensive problem) Use the end-of-year stock price data in the popup window, E, to answer the following questions for the Harris and Pinwheel companies.a. Compute the annual rates of return for each time period and for both firms.b. Calculate both the arithmetic and the geometric mean rates of return for the entire three-year period using your annual rates of return from part a. (Note: you may assume that neither firm paysany dividends.)c. Compute a three-year rate of return spanning the entire period (i.e., using the ending price for period 1 and ending price for period 4).d. Since the rate of return calculated in part c is a three-year rate of return, convert it to an annual rate of return by using the following equation:WSJ-(₁.1+e. How is the annual rate of return calculated in part d related to the geometric rate of return? When you are evaluating the performance of an investment that has been held for several years, whatTime1X234Time13234#8013Value ofHarris Stock$1161015EEnter the annual rate of return for each year for Pinwheel in the table below. (Round to two decimal places.)Annual RateValue ofHarris StockValue ofPinwheel Stockof ReturnDC$$11641015DOO888F4-45,45%66.67%50.00%b. The arithmetic average rate of retum earned by investing in Harris stock over this period is%. (Round to two decimal places.)RAnnual Rateof ReturnF-45.45 %66.67%50.00 %%5F5TV.G1+A6Value ofPinwheel StockBThree-YearRate of Return.$18F635Y3126$1835MacBook Air3126&7H44F7UAnnual Rateof ReturnNAnnual Rateof ReturnAnnual Rateof Return* Q8J%%%DILFB-(9MKDDMOSISO1OOVLFloPVcommand:;{1 +=[Next1911211Ioption b. The arithmetic average rate of return earned by investing in Harris stock over this period is %. (Round to two decimal places.)The arithmetic average rate of return earned by investing in Pinwheel stock over this period is%. (Round to two decimal places.)The geometric average rate of return earned by investing in Harris stock over this period is %. (Round to two decimal places.)The geometric average rate of return earned by investing in Pinwheel stock over this period is %. (Round to two decimal places.)c. The three-year rate of return spanning the entire period for Harris is %. (Round to two decimal places.)The three-year rate of return spanning the entire period for Pinwheel is %. (Round to two decimal places)d. The annual rate of retum converted from the three-year rate in part e for Harris isThe annual rate of retum converted from the three-year rate in part e for Pinwheel is%. (Round to two decimal places)%. (Round to two decimal places)e. How is the annual rate of return calculated in part d related to the geometric rate of return? (Select the best choice below)OA. The annual rate of return calculated in part d is nothing but the geometric average rate of return calculated in a different wayW5Xnd#33073EDC$A+DODDOOF4R20F%5F5TG6MacBook AirV. B76Y&M7H44F7UN*8JPUIFS119KMDD19MOSISOO)CO<LHPVcommandm;+{=[INext1?option

Rate of return:The lending industry has run a revolution across the globe through the early 2000s.…

(Solving a comprehensive problem) Use the end-of-year stock price data in the popup window, to answer the following questions for the Harris and Pinwheel companies. a. Compute the annual rates of return for each time period and for both firms. b. Calculate both the arithmetic and the geometric mean rates of return for the entire three-year period using your annual rates of return from part a. (Note: you may assume that neither firm pays any dividends.) c. Compute a three-year rate of return spanning the entire period (i.e., using the ending price for period 1 and ending price for period 4). d. Since the rate of return calculated in part c is a three-year rate of return, convert it to an annual rate of return by using the following equation: -)-(.* e. How is the annual rate of return calculated in part d related to the geometric rate of return? When you are evaluating the performance of an investment that has been held for several years, what Time Value of Harris Stock $11 Annual Rate of Return Three-Year Rate of Return Value of Pinwheel Stock $18 Annual Rate of Return Annual Rate of Return

(Solving a comprehensive problem) Use the end-of-year stock price data in the popup window, to answer the following questions for the Harris and Pinwheel companies. a. Compute the annual rates of return for each time period and for both firms. b. Calculate both the arithmetic and the geometric mean rates of return for the entire three-year period using your annual rates of return from part a. (Note: you may assume that neither firm pays any dividends.) c. Compute a three-year rate of return spanning the entire period (i.e., using the ending price for period 1 and ending price for period 4). d. Since the rate of return calculated in part c is a three-year rate of return, convert it to an annual rate of return by using the following equation: -)-(.* e. How is the annual rate of return calculated in part d related to the geometric rate of return? When you are evaluating the performance of an investment that has been held for several years, what Time Value of Harris Stock $11 Annual Rate of Return Three-Year Rate of Return Value of Pinwheel Stock $18 Annual Rate of Return Annual Rate of Return

Managerial Accounting: The Cornerstone of Business Decision-Making

7th Edition

ISBN:9781337115773

Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger

Chapter15: Financial Statement Analysis

Section: Chapter Questions

Problem 66P

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(Solving a comprehensive problem) Use the end-of-year stock price data in the popup window,, to answer the following questions for the Harris and Pinwheel companies. a. Compute the annual rates of return for each time period and for both firms. b. Calculate both the arithmetic and the geometric mean rates of return for the entire three-year period using your annual rates of return from part a. (Note: you may assume that neither firm pays any dividends.) c. Compute a three-year rate of return spanning the entire period (i.e., using the ending price for period 1 and ending price for period 4). d. Since the rate of return calculated in part c is a three-year rate of return, convert it to an annual rate of return by using the following equation: 1 + Three-Year Rate of Return 1 + Annual Rate of Return 3 e. How is the annual rate of return calculated in part d related to the geometric rate of return? When you are evaluating the performance of an investment that has been held for several…
(a) Compute the expected book value per share at time 1. (b) Compute the expected earnings per share of DTI at time 2. (c) Compute the expected value of the ex-dividend stock price at time 2. (d) Compute the expected value of the ex-dividend stock price at time 0. (e) Compute the expected return (over a single-period) on the stock of DTI at time 0 (in %).
Calculating the geometric and arithmetic average rate of return) Marsh Inc. had the following end-of-year stock prices over the last five years and paid no cash dividends: Time Marsh 1 $11 2 11 3 18 4 9 5 11 (Click on the icon in order to copy its contents into a spreadsheet.) a. Calculate the annual rate of return for each year from the above information. b. What is the arithmetic average rate of return earned by investing in Marsh's stock over this period? c. What is the geometric average rate of return earned by investing in Marsh's stock over this period? d. Considering the beginning and ending stock prices for the five-year period are the same, which type of average rate of return (the arithmetic or geometric) better describes the average annual rate of return earned over the period? Question content area bottom Part 1 a. The annual rate of return at the end of year 2 is enter your…
(Computing rates of return) From the following price data, compute the annual rates of return for Asman and Salinas. Time 1 2 3 12 4 14 (Click on the icon in order to copy its contents into a spreadsheet.) How would you interpret the meaning of the annual rates of return? Asman $9 11 Salinas $30 27 32 36 The rate of return you would have earned on Asman stock from time 1 to time 2 is %. (Round to two decimal places.)
I need help with questions a-d
use the end of your stock price data in the pop-up window to answer the following, questions from the Harris and pinwheel companies compute the annual rates return for each time, for both firms value of harris stock 10 8 14 15 value of pinwheel stock 17 34 31 24
O Below is the stock price and dividend history for No-Cameras-Allowed Inc. (NCA), a company organizing Las Vegas retreats for investment banks. Stock Price (end-of-year) Dividend (paid during the year) Year 2019 90 180 18 2020 2021 120 6. a. Compute the annual return in 2020 and 2021. b. Compute the arithmetic average return over the 2019–2021 period. c. Compute the geometric average return over the 2019–2021 period. d. You buy 2,000 shares of NCA at the end of 2019 and hold them through the end of 2021. You reinvest any dividends received (i.e., you use the dividend proceeds to buy more shares of NCA). Except for reinvestment of dividends, you neither buy nor sell any shares before the end of 2021. Which average, arithmetic or geometric, better captures your investment performance over the 2019–2021 period? Please provide a brief explanation for your answer. B Focus MacBook Pro
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An analyst has gathered the following information for the Oudin Corporation: Expected earnings per share = €5.49 Expected dividends per share = €2.13 Dividends are expected to grow at 2.53 percent per year indefinitely The required rate of return is 7.74 percent Based on the information provided, compute the price/earnings multiple for Oudin (Enter your answer as a number with two decimal places, like this: 12.34)
You have found the following historical information for the Daniela Company: Stock price EPS Year 1 Year 2 Year 3 Year 4 $49.24 2.59 $67.43 $61.19 $67.07 2.65 2.82 2.81 Earnings are expected to grow at 8 percent for the next year. What is the PE ratio for each year? (Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16.) Year 1 Year 2 Year 3 Year 4 What is the average PE ratio over this period? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Average PE Using the company's historical average PE as a benchmark, what is the target stock price in one year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Target price
H. As a new analyst, you have obtained the prices for the stocks of both Lulu and Lemon. Both stocks did not paid any dividends during the entire period. (1) (II) (III) Your manager has asked you (i) to compute the rate of return and standard deviation of the two stocks and suggest that because these companies produce similar products, you should continue your analysis by (ii) computing their covariance and correlation. Show all calculations. Year 2019 2020 2021 2022 2023 Closing prices of LuLu Closing prices of Lemon 20.50 30.10 19.92 28.50 22.45 30.10 24.50 40.30 20.50 36.40 Compute the return and standard deviation of a portfolio with 60% investment in Lulu and 40% in Lemon. Would you recommend putting these two stocks together in a portfolio? Explain why or why not.
Summarize and discuss the implications of the findings for the business or potential business transaction. ------- Kassidy's Kabob House has preferred stock outstanding that pays a dividend of $5 at the end of each year. The preferred sells for $50 a share. What is the stock's required rate of return? Assume the market is in equilibrium with the required return equal to the expected return. The stock's require rate of return is 10%.