A firm's stock is selling for $85. The dividend yield is 5.5%. A 8% growth rate is expected for the common stock. The firm's tax rate is 32%. What is the firm's cost of common equity?
Q: Bryley, Inc. earned a net profit margin of 5.5 percent last year and had an equity multiplier of…
A: The return on equity can be calculated as per the Dupont equation
Q: A firm’s stockholders expect a 10% rate of return, and there is $15M in common stock and retained…
A: Expected rate of return=10%Common stock and retained earnings=15 millionLoan=4millionAverage rate…
Q: The CFO of Blue Co. has collected the following information related to the firm’s cost of capital to…
A: Equity in Capital Structure = 75% Debt in Capital Structure = 25% YTM = 8% Tax Rate = 40%
Q: a firm has earnings of $500 million of which 40% will be paid out to investors. the firm has $2.5…
A: When all the earnings available for common shareholders are distributed to common shareholders, the…
Q: Krell Industries has a share price of $22.32 today. If Krell is expected to pay a dividend of $1.07…
A: Current stock price (P0) = $22.32 Expected dividend (D1) = $1.07 Price after 1 years (P1) = $23.71
Q: A company finances its operations with 60 percent debt and the rest using equity. The annual yield…
A: Given: Debt (D) = 60% Equity (E) = 40% Cost of debt (rd) = 4.1% Cost of equity (re) = 12.4% Tax =…
Q: A firm's stockholders expect a 12% rate of return, and there is $20M in common stock and retained…
A: The Weighted average cost of capital(WACC) refers to the method in which each category of capital is…
Q: You are given the following information about a firm. The growth rate equals 8 percent; return of…
A: Return on assets is one of the measure which shows how much net income or earnings are generated on…
Q: A company’s estimated growth rate in dividends is 6%, its currentstock price is $40, and its…
A: Expected Return: The expected return is the minimum required rate of return which an investor…
Q: mannix corporation stock currently sells for $65 per share. the market requires a return of 7…
A: According to the Gordon growth model. Price of stock = Recent dividend ×(1+ growth rate )(required…
Q: What is the firm's PEG ratio?
A: PEG ratio displays the relationship between the Earnings growth and the P/E ratio over a specific…
Q: My Inc. has a dividend growth rate of 6%, a market price of $16 a share, and a required return of…
A: Following information is given in the question: Dividend growth rate (g) = 6% = 0.06 Price of share…
Q: Serenity Systems Inc. is expected to pay a $2.50 dividend at year end (D, = $2.50), the dividend is…
A: The weighted average cost of capital is the weighted average of the cost of equity, cost of debt and…
Q: Suppose a firm has a retention ratio of 60 percent, net income of $8 million, and 4 million shares…
A: Retention ratio = 60% Net income = $8 million Number of shares = 4 million
Q: What is the value of this firm?
A: Value of Levered Firm: It is estimated by the sum of the value of the unlevered firm and the…
Q: the winter wear company has expected earnings before interest and taxes of 2,100, and unlevered cost…
A: Computation of value of unlevered firm: The value of firm is $10,852.
Q: Blue Co., a firm that grows at a constant rate of 5%, is trying to estimate its weighted average…
A: Growth rate (g) = 5% Recent dividend (D0) = P5 Current share price (P0) = P52.50
Q: Krell Industries has a share price of $21.88 today. If Krell is expected to pay a dividend of…
A: The stock price which is the maximum price to be paid for share consists of dividends and terminal…
Q: Krell Industries has a share price of $21.52 today. If Krell is expected to pay a dividend of $0.67…
A: Current stock price (P0) = $21.52 Expected next dividend (D1) = $0.67 Stock price at the end of…
Q: "s Hardwoods has a dividend payout ratio of 45 percent, a return on assets of 9.4 percent, anc quity…
A: Growth rate can be calculated from the return on equity and retention ratio of the company that is…
Q: company has stock which costs $45.00 per share and pays a dividend of $2.50 per share this year. The…
A: We can use the dividend discount model here. As per the dividend discount model: P0 = D1/(r-g) where…
Q: A company has a return on equity of 32 percent and plowback ratio of 50 percent. If the earnings of…
A: The Stock price is the current price of the share that is available in the stock market.
Q: The Drogon Co. just issued a dividend of $2.96 per share on its common stock. The company is…
A: Calculation of cost of equity:Hence, the cost of equity is 12.97%.
Q: A firm has 80,000 shares of stock outstanding with a market price of $25 per share. If net income…
A: The dividend yield is calculated as the ratio of dividend and the stock price.
Q: Aboudy Corporation's stock price is currently $22.00 per share. The company has just paid a dividend…
A: The formula used is shown:
Q: Houston Tools has expected earnings before interest and taxes of $189,400, an unlevered cost of…
A: A levered firm is one which has debt and an unlevered firm is one which has no debt. We will use the…
Q: Goliath Corp. just paid an annual dividend of $5.40 per share. The dividend growth rate is 5.5…
A: Annual dividend (D0) = $5.40 Growth rate (g) = 5.5% Tax rate = 21% Stock price (P0) = $58.50
Q: A firm’s stockholders expect an 12% rate of return, and there is $20M in common stock and retained…
A: Cost of capital is the cost of financing the activities through outside means a company has to bear.…
Q: A share has a current market value of 96cents, and the last dividend was 12cents. If the expected…
A: the cost of equity is the rate of return required on an investment in equity.
Q: Ornaments, Inc., is an all-equity firm with a total market value of $608,000 and 26,200 shares of…
A: Earnings per share It is the entity’s net profit that is divided by a number of outstanding common…
Q: The shares of a company are selling at Rs.40 per share and it had paid a dividend of Rs.4/share last…
A: The dividend discount model is the model of stock valuation that assumes that the stock price of a…
Q: A company will pay a dividend of $1.50 this year. Dividends are expected to grow by 6 % per year. If…
A: Given: Dividend =$1.5 Growth rate = 6% Cost of equity = 10%
Q: wilson's has 10,000 shares of common stock outstanding at a market price of $35 a share. the firm…
A: Computation of the weighted average cost of capital:Hence, the weighted average cost of capital is…
Q: A company has stock which costs $42.25 per share and pays a dividend of $2.90 per share this year.…
A: We require to calculate the annual growth rate of dividends from the following details: Stock price…
Q: Isetan Limited sells common stock for $18.00 a share and has a market rate of return of 5.0 percent.…
A: Dividend growth model Value of stock= D(1+g) /(ke - g) Here D= divided paid per share g=…
Q: An all -equity firm reports a net profit margin of 12% on sales of $6 million. If the tax rate is…
A:
Q: A company is expected to maintain a constant 3 percent growth rate in its dividends indefinitely. If…
A: Information provided:Constant growth rate = 3%Dividend yield = 4.85%
Q: Common stock for Hyundai Corporation sells for $68 per share. Last year the company paid a $5…
A:
Q: Jl co. Stock currently sells for $64 per share and the required return is 12 percent. The total…
A: We can use the dividend discount (growth) model here. We know that expected return = dividend yield…
Q: An all-equity firm had a dividend expense of $45,000 last year. The market value of the firmis…
A: Market value today, V is associted with the total expected dividend expense D1 via the following…
Q: Anle Corporation has a current price of $13, is expected to pay a dividend of $2 in one year, and…
A: Answer: 1. Calculation of Anle's expected dividend yield: Formula, Expected dividend yield =…
Q: Lamey Gardens has a dividend growth rate of 5.6 percent, a market price of $13.16 a share, and a…
A: Given: Growth rate = 5.6% Market price = $13.16 Required return = 14%
Q: Jones Soda estimates that its required return on equity is 11.0 percent and the yield to maturity on…
A: after tax cost of debt = before tax cost of debt * (1-taxrate)
Q: A firm earns $895 million in profits and pays $626 million in dividends for the year. The firm has…
A: Number of common shares = 390 million Number of preferred shares = 135 million Preferred dividend =…
Q: Builtrite's common stock is currently selling for $65 a share and the firm just paid an annual…
A: The cost of equity refers to the return that a company must earn to its investors and shareholders.…
A firm's stock is selling for $85. The dividend yield is 5.5%. A 8% growth rate is expected for the common stock. The firm's tax rate is 32%. What is the firm's
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- A firm's stock is selling for $85. The dividend yield is 5%. A 7% growth rate is expected for the common stock. The firm's tax rate is 32%. What is the firm's cost of common equity? A.12.00% B. 12.35% C. can not be determinedA firm's stock is selling for $65. The dividend yield is 6%. A 7% growth rate is expected for the common stock. The firm's tax rate is 21%. What is the firm's cost of retained earnings?Management of ABC Co. is attempting to estimate the company’s cost of equity capital. IF the company has a constant growth rate of 5%, a forecasted dividend of P2.11, a share price of P23.12 and is subject to 30% income tax, what is the estimated cost of ordinary equity?
- A firm is expected to pay an annual dividend of $2.40 per share next year. The market price of stock is $75.25 and the growth rate is 2.5%. What is the cost of equity?Dorpac Corporation has a dividend yield of 1.6%. Its equity cost of capital is 7.1%, and its dividends are expected to grow at a constant rate. a. What is the expected growth rate of Dorpac's dividends? b. What is the expected growth rate of Dorpac's share price? a. What is the expected growth rate of Dorpac's dividends? The growth rate will be _____ %. (Round to one decimal place.) Part 2 b. What is the expected growth rate of Dorpac's share price? What is the expected growth rate of Dorpac's share price? (Select the best choice below.)Rattle me Bones, Inc.'s common stock is currently selling for $52.75 per share. You expect the next dividend to be $4.28 per share. If the firm has a dividend growth rate of 6% that is expected to remain constant indefinitely, what is the firm's cost of equity?
- Dorpac Corporation has a dividend yield of 2.4 %. Dorpac's equity cost of capital is 8.4 %,and its dividends are expected to grow at a constant rate. a. What is the expected growth rate of Dorpac's dividends? b. What is the expected growth rate of Dorpac's share price?Dorpac Corporation has a dividend yield of 2.3%. Dorpac's equity cost of capital is 8.2%, and its dividends are expected to grow at a constant rate. a. What is the expected growth rate of Dorpac's dividends? b. What is the expected growth rate of Dorpac's share price?Dorpac Corporation has a dividend yield of 1.6%. Its equity cost of capital is 8.1%, and its dividends are expected to grow at a constant rate. a. What is the expected growth rate of Dorpac's dividends? b. What is the expected growth rate of Dorpac's share price? a. What is the expected growth rate of Dorpac's dividends? The growth rate will be%. (Round to one decimal place.)
- Dorpac Corporation has a dividend yield of 1.6%. Its equity cost of capital is 7.8%, and its dividends are expected to grow at a constant rate. a. What is the expected growth rate of Dorpac's dividends? b. What is the expected growth rate of Dorpac's share price? a. What is the expected growth rate of Dorpac's dividends? The growth rate will be %. (Round to one decimal place.) b. What is the expected growth rate of Dorpac's share price? What is the expected growth rate of Dorpac's share price? (Select the best choice below.) A. With constant dividend growth, the share price is expected to grow at rate g= 6.2% – 1.6% = 4.6%. B. With constant dividend growth, the share price is expected to grow at rate g= 6.2%. C. With constant dividend growth, the share price is expected to grow at rate g = 1.6%. D. With constant dividend growth, the share price is expected to grow at rate g= 7.8%.A company has just paid a dividend of 3.68$. Its discount rate is 11.2%, and the expected perpetual growth rate is 4.2%. What is the stock's Capital Gain Yield?Dorpac Corporation has a dividend yield of 1.7%. Its equity cost of capital is 7.7%, and its dividends are expected to grow at a constant rate. a. What is the expected growth rate of Dorpac's dividends? b. What is the expected growth rate of Dorpac's share price?