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. firm's financial statements: Round your answers to two decimal places. 20X1: 20X2: Year Operating income Interest Taxes Preferred dividends Common dividends 20X1 20X2 20X3 $18,000,000 $14,000,000 $18,000,000 4,600,000 4,500,000 8,100,000 5,400,000 4,200,000 4,700,000 1,500,000 1,200,000 1,400,000 2,400,000 3,300,000 20x3: What does your analysis indicate about the firm's capacity to pay preferred stock dividends? Times preferred dividend earned has-Select- 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. firm's financial statements: Round your answers to two decimal places. 20X1: 20X2: Year Operating income Interest Taxes Preferred dividends Common dividends 20X1 20X2 20X3 $18,000,000 $14,000,000 $18,000,000 4,600,000 4,500,000 8,100,000 5,400,000 4,200,000 4,700,000 1,500,000 1,200,000 1,400,000 2,400,000 3,300,000 20x3: What does your analysis indicate about the firm's capacity to pay preferred stock dividends? Times preferred dividend earned has-Select- 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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You've collected the following information from your favorite financial website. 52-Week Price Dividend Hi Lo Stock (Dividend) Yield % PE Ratio Close Price Net Change 77.40 10.43 Acevedo .36 2.6 6 13.90 -.24 55.96 33.57 Georgette, Incorporated 1.69 4.2 10 40.58 -.01 130.93 69.50 YBM 2.00 2.2 10 88.97 3.07 50.24 35.00 13.95 Manta Energy .80 5.2 15.43 -.26 20.74 winter sports .32 1.5 28 ?? .18 Find the quote for the Georgette, Incorporated. Assume that the dividend is constant. a. What was the highest dividend yield over the past year? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. What was the lowest dividend yield over the past year? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. a. Highest dividend yield b. Lowest dividend yield -7.54% 3.96 %
Question 1: Suppose you own 100 shares of General Motors stock, and the company earned $6 per share during the last reporting period. Suppose also that GM could either pay all of its earnings out as dividends (in which case you would receive $600) or retain the earnings in the business, buy more assets, and cause the price of the stock to increase by $6 per share (in which case the value of your stock would rise by $600). a. How would the tax laws influence what you, as a typical stockholder, would want the company to do? b. Would your choice be influenced by how much other income you had? Why might the desires of a 35-year-old doctor differ with respect to corporate dividend policy from the desires of a retiree living on a small income? c. How might the corporation’s decision with regard to the dividends it pays influence the price of its stock?
Find the average annual growth rate of the dividends for each firm listed in the following table: What is the average annual growth rate of the dividends paid by Loewen? % (Round to two decimal places.) Data table ... (Click on the following icon in order to copy its contents into a spreadsheet.) Dividend Payment per Year Firm 2006 2007 2008 2009 2010 2011 Loewen $1.02 $1.06 $1.10 $1.21 $1.27 $1.32 Morse $1.12 $0.80 $0.90 $1.30 $1.25 $1.45 Huddleston $1.25 $2.25 $3.70 $3.75 $3.90 $5.00 Meyer $2.40 $2.00 $2.10 $2.74 $2.80 $2.96 Print Done - ☑
Using the data in the table to the right, calculate the return for investing in the stock from January 1 to December 31. Prices are after the dividend has been paid. Return for the entire period is%. (Rourd to two decimal places.) Date Jan 1 Feb 5 May 14 Aug 13 Nov 12 Dec 31 Price $34.01 $29.79 $28.38 $33.82 $37.51 $41.91 Dividend $0.21 $0.21 $0.18 $0.21
You've collected the following information from your favorite financial website. 52-Week Price Dividend Hi 77.40 Lo Stock (Dividend) Yield % PE Ratio Close Price Net Change 10.43 Acevedo .36 2.6 6 13.90 -.24 55.81 33.42 Georgette, Incorporated 1.54 3.8 10 40.43 -.01 131.10 50.24 35.00 70.35 YBM 2.85 3.2 10 89.14 3.07 13.95 Manta Energy .80 5.2 6 20.74 Winter Sports .32 1.5 28 15.43 ?? -.26 .18 According to analysts, the growth rate in dividends for YBM for the next five years is expected to be 20 percent. Suppose YBM meets this growth rate in dividends for the next five years and then the dividend growth rate falls to 5.25 percent, indefinitely. Assume investors require a return of 13 percent on YBM stock. According to the dividend growth model, what should the stock price be today? Note: Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16. Current stock price
If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we now have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year. Suppose we have the following information on a particular company over the past four years: Year 1 Year 2 Year 3 Year 4 High price $ 98.70 $ $ $131.70 Low price 73.53 EPS 122.30 89.64 148.33 70.32 116.85 7.98 9.73 10.81 12.20 Earnings are projected to grow at 5 percent over the next year. a. What is your high target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is your low target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) a. High target stock price b. Low target stock price 4
A compay expects earnings to be $3.18 next year, after earning $3.00 this year. With PEG ratio of 2.00x, the company's current stock price is closet to: A. $36.00 B. $38.16 C. $39.30 D. $40.45
Find the average annual growth rate of the dividends for each firm listed in the following table: What is the average annual growth rate of the dividends paid by Loewen? 5.71% (Round to two decimal places.) What is the average annual growth rate of the dividends paid by Morse? % (Round to two decimal places.) Data table (Click on the following icon in order to copy its contents into a spreadsheet.) Firm Loewen Morse Huddleston Meyer (…) 2006 $1.00 $1.12 $1.75 $2.25 2007 $1.07 $0.90 $2.75 $2.50 2008 $1.20 $0.70 $3.70 $2.10 Dividend Payment per Year 2009 2010 $1.20 $1.25 $1.10 $1.20 $3.90 $3.80 $2.71 $2.80 2011 $1.32 $1.45 $5.25 $2.98 ▬▬▬▬▬▬▬▬▬▬▬▬ - X
Ellington Electronics wants you to calculate its cost of common stock. During the next 12 months, the company expects to pay dividends (D1) of $3.70 per share, and the current price of its common stock is $76 per share. The expected growth rate is 7 percent. (Do not round intermediate calculations. Round the final answers to 2 decimal places.) a. Compute the cost of retained earnings (Ke). Cost of retained earnings % b. If a $7.0 flotation cost is involved, compute the cost of new common stock (Kn). Cost of new common stock %
If you look at stock prices over any year, you will find a high and low stock price for the year. Instead of a single benchmark PE ratio, we now have a high and low PE ratio for each year. We can use these ratios to calculate a high and a low stock price for the next year. Suppose we have the following information on a particular company over the past four years: Year 1 Year 2 Year 3 Year 4 High price $ 99.70 $ 123.30 $ 132.70 $ 149.33 Low price 74.53 90.64 71.32 117.85 EPS 8.98 10.73 11.81 13.20 Earnings are projected to grow at 9 percent over the next year. a. What is your high target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is your low target stock price over the next year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
What is the average annual growth rate of the dividends paid by each of the 4 firms

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