**Text for Educational Website:****Title: Understanding Evanec Company's Financial Metrics****Introduction:**This educational module explores the financial metrics related to Evanec Company's expected dividend, growth rate, cost of capital, and other related financial parameters. These concepts are crucial for understanding how companies assess their financial performance and make investment decisions.**Scenario Details:**Evanec Company's next expected dividend, denoted as $ D_1 $, is projected to be $3.08. The company's growth rate stands at 4%, and its common stock is currently trading at $39.00. Meanwhile, new stock (external equity) can be issued, netting $31.20 per share.**Exercises:**a. **Cost of Retained Earnings ($ r_s $):**- **Task:** Calculate Evanec's cost of retained earnings.- **Instructions:** Do not round intermediate calculations and ensure your final answer is rounded to two decimal places.- **Answer Box:** $ r_s = \_\_\_\_ \% $b. **Percentage Flotation Cost (F):**- **Task:** Determine Evanec's percentage flotation cost.- **Instructions:** Round your answer to two decimal places.- **Answer Box:** $ F = \_\_\_\_ \% $c. **Cost of New Common Stock ($ r_e $):**- **Task:** Calculate Evanec's cost of new common stock.- **Instructions:** Do not round intermediate calculations and round your final answer to two decimal places.- **Answer Box:** $ r_e = \_\_\_\_ \% $**Conclusion:**These calculations are fundamental in the field of finance, providing insights into how companies evaluate their cost of capital. By mastering these concepts, students and professionals can better analyze and interpret financial data to make informed investment decisions.

Cost of retained earning (r) =D1/P0 +g where D1 = Dividend next year P0 = Current stock price g =…

The Evanec Company's next expected dividend, D1, is $3.08; its growth rate is 4%; and its common stock now sells for $39.00. New stock (external equity) can be sold to net $31.20 per share. a. What is Evanec's cost of retained earnings, rs? Do not round intermediate calculations. Round your answer to two decimal places. rs = b. What is Evanec's percentage flotation cost, F? Round your answer to two decimal places. F = c. What is Evanec's cost of new common stock, re? Do not round intermediate calculations. Round your answer to two decimal places. re %

The Evanec Company's next expected dividend, D1, is $3.08; its growth rate is 4%; and its common stock now sells for $39.00. New stock (external equity) can be sold to net $31.20 per share. a. What is Evanec's cost of retained earnings, rs? Do not round intermediate calculations. Round your answer to two decimal places. rs = b. What is Evanec's percentage flotation cost, F? Round your answer to two decimal places. F = c. What is Evanec's cost of new common stock, re? Do not round intermediate calculations. Round your answer to two decimal places. re %

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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As the assistant to the CFO of Johnstone Inc., you must estimate its cost of common equity. You have been provided with the following data: D0 = $0.80; P0 = $22.50; and gL = 8.00% (constant). Based on the dividend growth model, what is the cost of common from reinvested earnings? 10.69% 11.25% 11.84% 12.43% 13.05%
A firm's target dividend is $4.40 and the prior-period dividend is $2.75. What is the change in dividends if the adjustment coefficient (B) is equal to 1? O $-3.30 O $3.30 00 O $1.65
F The dividend yield is 4.2%. (Round to one decimal place.) The capital gain rate is ☐ %. (Round to one decimal place.) Krell Industries has a share price of $22.12 today. If Krell is expected to pay a dividend of $0.94 this year and its stock price is expected to grow to $24.82 at the end of the year, what is Krell's dividend yield and equity cost of capital?
The Co. pays an annual dividend that is expected to increase by 4.1%/year. The stock’s return = 12.6% and sells for $24.9/share. Calculate the next dividend (D1) A. $2.03B. $2.12C. $3.17D. $2.20
6) Needham Pharmaceuticals has a profit margin of 2% and an equity multiplier of 2.0. Its sales are $110 million and it has total assets of $50 million. What is its return on equity (ROE)? Do not round intermediate calculations. Round your answer to two decimal places.
The market price of a stock is $24.09 and it just paid a dividend of $1.73. The required rate of return is 11.72%. What is the expected growth rate of the dividend? Submit Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924)) Hide Hint Similar to CSD Chapter 7 #13
3. Guava Computers currently has earnings per share of $2.40, a dividend payment per share of $0.80, and book equity per share of $10. a. What is the company's rate of return on equity? What is its plowback ratio? b. Using the plowback/rate of return method, estimate the growth rate of dividend payments per share. What is your estimate of the capitalization rate on Guava's stock if the stock is currently selling for $23.20 с. per share? d. What is your estimate of the company's present value of growth opportunities if its discount rate is 15 percent?
The Evanec Company's next expected dividend, D1, is $3.50; its growth rate is 5%; and its common stock now sells for $38.00. New stock (external equity) can be sold to net $34.20 per share. A) What is Evanec's cost of retained earnings, rs? Do not round intermediate calculations. Round your answer to two decimal places.rs = % B) What is Evanec's percentage flotation cost, F? Round your answer to two decimal places.F = % C) What is Evanec's cost of new common stock, re? Do not round intermediate calculations. Round your answer to two decimal places. re = %
The next dividend payment by Im, Incorporated, will be $1.48 per share. The dividends are anticipated to maintain a growth rate of 5 percent forever. If the stock currently sells for $27 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.)
(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 %).
The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 8% per year. Callahan's common stock currently sells for $28.50 per share; its last dividend was $2.50; and it will pay a $2.70 dividend at the end of the current year. Using the DCF approach, what is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places. % If the firm's beta is 2.0, the risk-free rate is 5%, and the average return on the market is 12%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places. % If the firm's bonds earn a return of 11%, based on the bond-yield-plus-risk-premium approach, what will be rs? Use the midpoint of the risk premium range discussed in Section 10-5 in your calculations. Round your answer to two decimal places. % If you have equal confidence in the inputs used for the three approaches, what is your estimate of Callahan's…
Suppose you know that a company's stock currently sells for $45.85 per share and the required return on the stock is 6.48 percent. You also know that the total return on the stock is evenly divided between capital gains yield and dividend yield. If it's the company's policy to always maintain a constant growth rate in its dividends, what is the current dividend per share? Answer to two decimals.

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