am. 111. For Bonds片Years until maturityCoupon rate (assume annual coupon payments)FaceCurrent PriceNumber of bonds outstanding248.80%1,0001,17022,000For Preferred StockPrice of Preferred Stock30.20Dividend on Preferred2.86Number or preferred shares outstanding30,500For Common StockCommon price26.60Estimated growth rate in dividends2.30%Estimated dividend in one year2.47(Assume annual dividends)Number of common shares outstanding503,000456 Tax rate78 What is WACC?9 A Between 0.0% and 8.0%0 B Between 8.0% and 10.0%81 C Between 10.0% and 12.0%82 D Between 12.0% and 16.0%35.50%

To calculate the Weighted Average Cost of Capital (WACC), we need to find the cost of each component…

Answered: For Bonds 片 Years until maturity Coupon…

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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number of outstanding shares100 000Earnings300 000Retention ratio60%91-day Treasury bill rate6%Market risk premium8%UFSK Beta1.2Dividend growth rate stable phase5%Bonds outstanding5 000Par value per bond1000Semi-annual coupon rate on bonds6%Bond yield to maturity8%Bond years remaining to maturity4Corporate tax rate30%Additional informationUFSK limited recently paid a dividendUFSK recently signed a deal and expects a super normal growth in earnings. The company expects earnings to grow by 8% for the first two years then decline by 2% in the following year, there after a stable growth of 5% is expected into the future.Required:. Determine the fair value of UFSK limited bond
number of outstanding shares100 000Earnings300 000Retention ratio60%91-day Treasury bill rate6%Market risk premium8%UFSK Beta1.2Dividend growth rate stable phase5%Bonds outstanding5 000Par value per bond1000Semi-annual coupon rate on bonds6%Bond yield to maturity8%Bond years remaining to maturity4Corporate tax rate30%Additional informationUFSK limited recently paid a dividendUFSK recently signed a deal and expects a super normal growth in earnings. The company expects earnings to grow by 8% for the first two years then decline by 2% in the following year, there after a stable growth of 5% is expected into the future.Required:Determine the total value of the company’s debt
number of outstanding shares100 000Earnings300 000Retention ratio60%91-day Treasury bill rate6%Market risk premium8%UFSK Beta1.2Dividend growth rate stable phase5%Bonds outstanding5 000Par value per bond1000Semi-annual coupon rate on bonds6%Bond yield to maturity8%Bond years remaining to maturity4Corporate tax rate30%Additional informationUFSK limited recently paid a dividendUFSK recently signed a deal and expects a super normal growth in earnings. The company expects earnings to grow by 8% for the first two years then decline by 2% in the following year, there after a stable growth of 5% is expected into the future.Required:As an investment analyst advise your client how much must she expect to pay for UFSK limited stock.
Integrative-Risk and Valuation Given the following information for the stock of Foster Company, calculate the risk premium on its common stock. below in order to copy its contents into a spreadsheet.) $48.77 Current price per share of common stock Expected dividend per share next year Constant annual dividend growth rate $1.19 5.7% Risk-free rate of return 3.3% The risk premium on Foster stock is %. (Round to two decimal places.)
P7-23 Integrative: Risk and valuation Given the following information for the stock of Foster Company, calculate the risk premium on its common stock. Current price per share of common $50.00Expected dividend per share next year $ 3.00Constant annual dividend growth rate 6.5%Risk-free rate of return 4.5%
Use the following information relating to a float-adjusted market-capitalization-weighted equity index Security % of Shares in the Market Float A B C Shares Outstanding 20,000 15,000 5.11% 1. 2. 6.22% 3. 7.11% 41% 37% 53% Price at the End of 2009 ($) 42 54 20,000 Assume that all dividend payments are made at the end of the year. The total return on the index is closest to: 27 Price at the End of 2010 ($) 38 51 35 Dividends per Share ($) 0.85 2.15 1.12
Activity 1: Direction: Consider the following stocks and solve for the missing element in each row: Stock Current year's dividend (Php) Required rate of Value of a share of Expected growth in dividend Stock (Php) return 20 5% 7% 3% 5% 520 35 10% 735 Activity 2: Direction: Find the nond discount and purchase price of the following: Face Value Bond rate Term Yield Rate 1. Php 34, 000 2. Php 9, 000 7 %, m= 2 9%, m = 4 4 years 2 years 10%, m 2 9.5%, m = 4 Assessment: Direction: Answer the following problems. Show your solutions and answers on the sheet provided. 1. The dividend on a common stock of a certain company will be Php 60 on the first year, Php 85 on the second year, and Php 120 on the third year. You can sell the stock after you received the dividend of Php 200 at the end of three years. If you require a 9% retum on your investment, how much will you be willing to pay for a share of this stock today? 2. What is the purchase price for a Php 55, 000 bond with a periodic rate of 8%…
Integrative—Risk and Valuation Given the following information for the stock of Foster Company, calculate the risk premium on its common stock. Current price per share of common stock $40.91 Expected dividend per share next year $3.12 Constant annual dividend growth rate 6.2% Risk-free rate of return 7.9% The risk premium on Foster stock is ____% (Round to two decimal places.)
Stock price Shares outstanding (millions) Mkt value Debt (millions) Capitalization (book value) Debt Equity Beta Target D/E Cost of debt Market Info Risk-free rate Comparable Company 10 1,000 10,000 20.00% 80.00% 1.40 n/a 6.50% 4.00% Market Risk Premium 5.00% Company A n/a n/a n/a 25.00% 75.00% n/a 0.80 5.00% Required: Use the relevant Comparable Company and Company A to calculate the WACC for Company A Assume the tax rate for both companies is 30%.
Complete the output below given the information given INPUT Trading EBITDA Multiple Shares Outstanding Total Debt Cash EBITDA Dividends per share Dividend Growth Rate Risk Free Rate Market Return Beta Analysts Avg Target Price OUTPUT-ANSWERS Current Trading Stock Price Stock Value Price based on Intrinsic Value (assume this year's dividend) Dividend Discount Model (assume this year's dividend). 11.000X 140 million 1,100 million 450 million 740 million $1.40 per share 10% 2.50% 12.00% 1.500X $48.00 Enter Answers $53.50 $0.98
Given the following information: Percent of capital structure: Debt Preferred stock Common equity (retained earnings) Additional information: Bond coupon rate Bond yield to maturity Dividend, expected common Dividend, preferred Price, common Price, preferred Flotation cost, preferred Growth rate Corporate tax rate 13% 11% Debt Preferred stock Common equity (retained earnings) Weighted average cost of capital $ 7.00 $ 14.00 $ 70.00 $110.00 $ 2.50 30% 10% 5 85 Calculate the Hamilton Corp's weighted cost of each source of capital and the weighted average cost of capital. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Weighted Cost %
19) You are given the following information regarding UFSK limited, a listed entity. I Number of outstanding shares 100 000 Earnings 300 000 Retention ratio 60% 91-day Treasury bill rate 6% Market risk premium 8% UFSK Beta 1.2 Dividend growth rate stable phase 5% Bonds outstanding 5 000 Par value per bond 1000 Sermi-annual coupon rate on bonds 6% Bond yleld to maturity 8% Bond years remaining to maturity 4 Сегрогate tax rate 30% Additional information • UFSK limited recently paid a dividend • UFSK recently signed a deal and expects a super normal gronth in eamings. The company expects earnings to grow by 8% for the first two years then decline by 2% in the following year, there after a stable growth of 5% is expected into the future Required a) As an investment analyst advise your client how much must she expect to pay for UFSK limited stock b) Ascertain the market value of UFSK imited equity. c) Determine the fair value of UFSK imited bond d) Determine the total value of the company's…

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