Answer? ? Ganeral Accounting question The current market price of ABCD's stock is $30 pershare. ABCD just paid a $2 dividend and its dividend isexpected to grow by 5% in the coming year. Therequired rate of return for ABCD is 15%. What is ABCD'sdividend yield and its capital gains yield?a. 6.7%; 8.3%b. 8%; 7%c. 5%; 10%d. 7%; 8%e. 10%; 5%

Step 1: Define Capital Gain YieldThe excess amount realized is capital gain yield whenever an item…

Answered: The current market price of ABCD's…

Intermediate Financial Management (MindTap Course List)

13th Edition

ISBN:9781337395083

Author:Eugene F. Brigham, Phillip R. Daves

Publisher:Eugene F. Brigham, Phillip R. Daves

Chapter8: Basic Stock Valuation

Section: Chapter Questions

Problem 2P

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Assume that IWT has completed its IPO and has a $112.5 million capital budget planned for the coming year. You have determined that its present capital structure (80% equity and 20% debt) is optimal, and its net income is forecasted at $140 million. Use the residual distribution approach to determine IWT’s total dollar distribution. Assume for now that the distribution is in the form of a dividend. Suppose IWT has 100 million shares of stock outstanding. What is the forecasted dividend payout ratio? What is the forecasted dividend per share? What would happen to the payout ratio and DPS if net income were forecasted to decrease to $90 million? To increase to $160 million? In general terms, how would a change in investment opportunities affect the payout ratio under the residual distribution policy? What are the advantages and disadvantages of the residual policy? (Hint: Don’t neglect signaling and clientele effects.)
Ogier Incorporated currently has $800 million in sales, which are projected to grow by 10% in Year 1 and by 5% in Year 2. Its operating profitability ratio (OP) is 10%, and its capital requirement ratio (CR) is 80%? What are the projected sales in Years 1 and 2? What are the projected amounts of net operating profit after taxes (NOPAT) for Years 1 and 2? What are the projected amounts of total net operating capital (OpCap) for Years 1 and 2? What is the projected FCF for Year 2?
The current market price of ABCD's stock is $30 per share. ABCD just paid a $2 dividend and its dividend is expected to grow by 5% in the coming year. The required rate of return for ABCD is 15%. What is ABCD's dividend yield and its capital gains yield? a. 6.7%; 8.3% b. 8%; 7% c. 5%; 10% d. 7%; 8% e. 10%; 5%
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NTT Corp is expected to pay a $2.80 annual dividend to its common shareholders next year. Analysts expect these dividends to grow indefinitely at a 6.5 percent annual rate. If the required rate of return on the common stock is 10.8 percent, what is the intrinsic value of the common stock? a. $56.28 b. $61.44 c. $65.12 d. $69.35
Albright Motors is expected to pay a year- end dividend of $3.00 a share (D1 = $3.00). The stock currently sells for $30 a share. The required (and expected) rate of return on the stock is 16 percent. If the dividend is expected to grow at a constant rate, g, what is g? a. 7.00% b. 13.00% C. 10.05% d. 5.33% e. 6.00%
Ocean Holding Corp.'s expected year-end dividend (D1) is $4.00, and its required return is 11 %. The company's dividend yield is 5.5 %, and its growth rate is expected to be constant in the future. What is the firm's stock price?
If the last dividend paid by Chemical Brothers Inc. was $1.25 and analysts expect these payments to increase 4% per year, what will the stock price be next year if the required return is 15%? Select one: O a. $12.29 O b. $11.82 O c. $31.25 O d. $12.78 O e. $23.11
Lucus Laboratories' last dividend was $1.50. Its current equilibriuem stock price is $15.75 and is expected to grow at a constant 5 percent. If the stockholders' required rate of return is 15 percent, what is the expected dividend yield and expected capital gains yield for the coming year?
HighGrowth Company has a stock price of $20. The firm will pay a dividend next year of $1.18, and its dividend is expected to grow at a rate of 4.4% per year thereafter. What is your estimate of HighGrowth's cost of equity capital? The required return (cost of capital) of levered equity is %. (Round to one decimal place.) (...)
Francis Inc.'s stock has a required rate of return of 10.25%, and it sells for $87.50 per share. The dividend is expected to grow at a constant rate of 6.00% per year. What is the expected year-end dividend, D1? a. $2.79 O b. $4.65 O c. $3.72 O d. $3.90 Ое. $3.16
What is the expected annual capital gain yield for Orange Corp stock, based on the Dividend Discount Model? The company plans to pay an annual dividend of of $5.13 per share in one year. The expected annual growth rate of the dividend is 10.45%, and the required rate of return for the stock is 14.82%. Answer as a percentage, 2 decimal places (e.g., 12.34% as 12.34). Answer: Check

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