homework will not be graded. Name(s): Student ID 1. A constant-growing stock just paid $2 dividend and has a current market price of $30. Determine the stock’s required rate of return if the company’s constant growth rate is 5%. a. 5% b. 7% c. 12% d. 14% 1. c R = D1/Po + g = 2(1+0.05)/30 + 0.05 = 0.12 2. Stock analysts just predicted that Hybrid Engine Company’s earnings and dividends will grow at 20% each year for the next two years due to its new invention. After that‚ its growth
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paid-in capital. C. Companies pay dividends on their common or ordinary shares because of numerous reasons. Generally‚ dividend is viewed as interest resulted from shareholders’ investment. When companies stay profitable and have stable earning‚ dividends can send a strong message to the market about the outstanding performance of management to attract more investors. However‚ when it is determined that the cash would yield more profits by reinvestment‚ paying out dividends may not be favorable. Company
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The Cost of Capital Project: Internet Version {December 2009} By Wm R McDaniel‚ PhD Objective The assignment is to estimate the weighted average cost of capital (WACC) for an actual corporation as of the current time. Actual managers would need to know their company’s WACC as a starting datum to estimate the discount rate to use in the net present value analysis of new projects or of termination decisions. The student will later need to know the technique for application in some case
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classmates for their help and wishes for the successful completion of this project. Group 1 Section C LBSIM Table of Contents Introduction to corporate history Performance highlights Risk‚ Return And Beta… Cost of Capital of ACC Dividend Policy Capital Structure Leverage Review of Cash Management And Working Capital Financial Analysis of ACC
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value of $1‚128 and will mature in 10 years. The firm’s marginal tax rate is 34%. b. A new common stock issue that paid a $1.81 dividend last year. The firm’s dividends are expected to continue to grow at 7.2% per year forever. The price of the firm’s common stock is now $27.28 c. A preferred stock paying a 8.5% dividend on a $138 par value. d. A bond selling to yield 11.7% where the firm’s tax rate is 34%. 4. Your firm is considering a new investment proposal and would like to calculate its
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0.50 7. Retained earnings are _______ dividend pay out is ________ if a company is aiming for future growth through internal financing A. High ‚ High B. Low‚ Low‚ C. High‚ Low D. Low‚ High 8. Dividend per share (÷. Market price per share = A. Dividend yield B. Dividend per share C. Dividend Payout Ratio D. None of the rest 9. 63. Dividend pear share (÷. Earning per share = A. Dividend yield B. Dividend per share C. Dividend Payout Ratio D. None of the rest The
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risk premium and the 8% being paid by other A-rated corporate long-term bonds. B. It is not an appropriate measure of the firm’s cost of equity. Because the earnings yield is lower than WACC. Because the earnings per share of $2.30 and a share price of $30.50‚ the E/P is 7.5%. And the cost of equity should be based on the dividend yield and capital gain. Q3: A. The best estimate of Ace’s cost of debt: Rd= 8.30% T= 40% After-tax
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of common stock of DL Smith‚ Inc. What is the return that these individuals require on this investment called? A. dividend yield B. cost of equity C. capital gains yield D. cost of capital E. income return 2. Textile Mills borrows money at a rate of 13.5 percent. This interest rate is referred to as the: A. compound rate. B. current yield. C. cost of debt. D. capital gains yield. E. cost of capital. 3. The average of a firm’s cost of equity and aftertax cost of debt that is weighted based on
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Tutorial 1 1. Ice breaking session 2. General overview of financial markets and institutions module 3. Group project briefing 4. Mid semester and final examination 5. Other relevant matters Tutorial 2 : Financial Intermediation 1. Why is financial intermediation important in the economy? Because they channel funds from those who do not have a productive use for them (surplus sector) to those who do (deficit sector)‚ thereby resulting in higher economic efficiency
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York: Wiley‚ 1980. Campbell‚ J. Y. ‘‘A Variance Decomposition for Stock Returns.’’ Economic Journal‚ 101‚ 1991‚ 157–79. Campbell‚ J. Y.‚ and R. J. Shiller. ‘‘The Dividend-Price Ratio and Expectations of Future Dividends and Discount Factors.’’ Review of Financial Studies‚ 1‚ 1988a‚ 195–228. ———. ‘‘Stock Prices‚ Earnings‚ and Expected Dividends.’’ Journal of Finance‚ 43‚ 1988b‚ 661–76. ———. ‘‘Valuation Ratios and the Long-Run Stock Market Outlook.’’ Journal of Portfolio Management‚ Winter 1998‚ 11–26
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