Tanrun Inc. is expected to pay an annual dividend of $0.45 per share in one year. Analysts expect the firm's dividends to grow by 6% forever. Its stock price is $38.7 and its beta is 1.7. The risk-free rate is 2% and the expected market risk premium is 4.5%. 2. What is the best guess for the cost of equity? (3+ Decimals) Pfizer is expected to pay an annual dividend of $1.85 one year from now. Dividends are expected to grow by 2.5% every year and the current stock price is $247.2. The company is in the process of issuing new common stock, with flotation costs of $1.7 per share. 3. What is the cost of new common stock? (3+ Decimals) Idaho Engineering Inc. has a target capital structure of 29% debt, 10% preferred stock and 61% common stock. The interest rate on new debt is 4.3% (before taxes), the yield on preferred stock is 8% and the cost of retained earnings is 13%. The firm will not be issuing any new stock, and the tax rate is 35%. 4. What is the company's weighted average cost of capital? (3+ Decimals)
Dividend Valuation
Dividend refers to a reward or cash that a company gives to its shareholders out of the profits. Dividends can be issued in various forms such as cash payment, stocks, or in any other form as per the company norms. It is usually a part of the profit that the company shares with its shareholders.
Dividend Discount Model
Dividend payments are generally paid to investors or shareholders of a company when the company earns profit for the year, thus representing growth. The dividend discount model is an important method used to forecast the price of a company’s stock. It is based on the computation methodology that the present value of all its future dividends is equivalent to the value of the company.
Capital Gains Yield
It may be referred to as the earnings generated on an investment over a particular period of time. It is generally expressed as a percentage and includes some dividends or interest earned by holding a particular security. Cases, where it is higher normally, indicate the higher income and lower risk. It is mostly computed on an annual basis and is different from the total return on investment. In case it becomes too high, indicates that either the stock prices are going down or the company is paying higher dividends.
Stock Valuation
In simple words, stock valuation is a tool to calculate the current price, or value, of a company. It is used to not only calculate the value of the company but help an investor decide if they want to buy, sell or hold a company's stocks.
Tanrun Inc. is expected to pay an annual dividend of $0.45 per share in one year. Analysts expect the firm's dividends to grow by 6% forever. Its stock price is $38.7 and its beta is 1.7. The risk-free rate is 2% and the expected market risk premium is 4.5%.
2. What is the best guess for the
Pfizer is expected to pay an annual dividend of $1.85 one year from now. Dividends are expected to grow by 2.5% every year and the current stock price is $247.2. The company is in the process of issuing new common stock, with flotation costs of $1.7 per share.
3. What is the cost of new common stock? (3+ Decimals)
Idaho Engineering Inc. has a target capital structure of 29% debt, 10%
4. What is the company's weighted average cost of capital? (3+ Decimals)
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