You are considering purchasing the preferred stock of a firm but are concerned about its capacity to pay the dividend. To help allay that fear, you compute the times-preferred- dividend-earned ratio for the past three years from the following data taken from the firm's financial statements: Year 20x1 20X2 20X3 Operating income $18,000,000 $16,000,000 $15,000,000 Interest 9,100,000 6,600,000 5,200,000 Таxes 5,100,000 4,100,000 4,400,000 Preferred dividends 1,300,000 1,000,000 800,000 Common dividends 2,400,000 3,000,000 Round your answers to two decimal places. 20X1: 20X2: 20X3: What does your analysis indicate about the firm's capacity to pay preferred stock dividends? Times preferred dividend earned has -Select- v each year, which indicates the firm's capacity to pay the dividend has -Select-

You are considering purchasing the preferred stock of a firm but are concerned about its capacity to pay the dividend. To help allay that fear, you compute the times-preferred- dividend-earned ratio for the past three years from the following data taken from the firm's financial statements: Year 20x1 20X2 20X3 Operating income $18,000,000 $16,000,000 $15,000,000 Interest 9,100,000 6,600,000 5,200,000 Таxes 5,100,000 4,100,000 4,400,000 Preferred dividends 1,300,000 1,000,000 800,000 Common dividends 2,400,000 3,000,000 Round your answers to two decimal places. 20X1: 20X2: 20X3: What does your analysis indicate about the firm's capacity to pay preferred stock dividends? Times preferred dividend earned has -Select- v each year, which indicates the firm's capacity to pay the dividend has -Select-

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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See Table 2.5 LOADING... showing financial statement data and stock price data for Mydeco Corp. Suppose Mydeco's costs and expenses had been the same fraction of revenues in 2016-2019 as they were in 2015. What would Mydeco's EPS have been each year in this case? Calculate the new EPS for 2016-2019 below: (Round dollar amounts and number of shares to one decimal place. Round percentage amount and the EPS to two decimal places.)
An investor with a required return of 15 percent for very risky investments in common stock has analyzed three firms and must decide which, if any, to purchase. The information is as follows: Firm A B C Current earnings $ 1.60 $ 3.20 $ 6.80 Current dividend $ 2.10 $ 2.50 $ 6.40 Expected annual growth rate in 5 % 2 % -3 % dividends and earnings Current market price $ 24 $ 23 $ 41 What is the maximum price that the investor should pay for each stock based on the dividend-growth model? Round your answers to the nearest cent. Stock A: $ Stock B: $ Stock C: $ If the investor does buy stock A, what is the implied percentage return? Round your answer to two decimal places. % If the appropriate P/E ratio is 17, what is the maximum price the investor should pay for each stock? Round your answers to the nearest cent. Stock A: $ Stock B: $ Stock C: $ If the appropriate P/E ratio is 5, what is the maximum…
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The following financial information is available on Rawls Manufacturing Company: Current per share market price $48.00 Current per share dividend $3.50 Current per share earnings $6.00 Beta 1.1 Expected rate of return on market 12.0% Risk-free rate 6.0% Expected long-term growth rate 5.0% Rawls can issue new common stock to net the company $44 per share. Determine the cost of external equity capital using the dividend capitalization model approach. (Compute the answer to the nearest 0.1%.) a 12.6% b. 14.4% c.13.4% d.12.7%
Example: Stock Valuation Consider the following information for the company Fledgling Electronics: Expected earnings per share at the end of year $8.33 Expected dividend per share at the end of year $5 Market capitalization rate (r) 15% Expected growth rate dividends (per year) 10% 1. Calculate the current price per share of Fledgling Electronics 2. Calculate the capitalized value of Fledgling's EPS if it had a no growth policy 3. Calculate the present value of Fledgling's growth opportunities
Suppose Potter Ltd. just issued a dividend of $2.52 per share on its common stock. The company paid dividends of $2.02, $2.09, $2.26, and $2.36 per share in the last four years. If the stock currently sells for $71, what is your best estimate of the company’s cost of equity capital using arithmetic and geometric growth rates?
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Suppose Wacken, Limited, just issued a dividend of $2.73 per share on its common stock. The company paid dividends of $2.31, $2.39, $2.48, and $2.58 per share in the last four years. a. If the stock currently sells for $43, what is your best estimate of the company's cost of equity capital using the arithmetic average growth rate in dividends? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.., 32.16.) b. What if you use the geometric average growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Cost of equity b. Cost of equity

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