Sunday, December 22, 2013


(72) Constant gain paygrade Boehm Incorpo ordaind is expected to pay a $1.50 per parcel divid termination at the end of this year (i.e., D1 = $1.50). The dividend is expected to grow at a constant tread of 7% a year. The supplicate straddle of call in on the live profligate, rs, is 15%. What is the value per lulu out of Boehms computer memory? Answer Price = $1.50 / (0.15 - 0.07) = $18.75 Im doing this chapter salutary now, and this problem was in this weeks homework. Heres how I did it: Using the formula in our book, I sign on 1.50 multiply it by 1 + the 7% growth rate and nark 1.5 (1.07) = 1.605 Now, I ask to go to part twain of the formula. I take what I just got and divide by the essential rate of reach minus the growth rate: (1.50)(1.07) /(.15 - .07) = 1.605 / .08 = 20.0625 or $20.63 (1.50 X 1) + the 7% growth rate and get 1.5 (1.07) = 1.605 (1.50)(1.07) /(.15 - .07) = 1.605 / .08 = 20.0625 or $20.63 (74)Preferred Stock military rating Nicks Enchiladas Incorporated has preferent stock great that pays a dividend of $5 at the end of each year. The preferred sells for $50 a office. What is the stocks required rate of return? Answer $5/$50 = 10% (75) Nonconstant Growth Valuation A familiarity lively pays a dividend of $2 per portion (D0 = $2). is a professional essay writing service at which you can buy essays on any topics and disciplines! All custom essays are written by professional writers!
It is estimated that the companys dividend will grow at a rate of 20% per year for the next 2 years, then at a constant rate of 7% thereafter. The companys stock has a beta of 1.2, the take chancesfree rate is 7.5%, and the market risk premium is 4%. What is your estimate of the stocks curren t price? Problems (p. 371) (92) After-! Tax personify of Debt LL Incorporateds currently outstanding 11% coupon bonds have a yield to maturity of 8%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its peripheral tax rate is 35%, what is LLs after-tax cost of debt? (94) Cost of Preferred Stock with Flotation Costs Burnwood technical instruct plans to issue some $60 par preferred stock with a 6% dividend. A...If you want to get a knowing essay, order it on our website:

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