Homework Answers
Growth rate=ROE*retention ratio =12%*50% =6%
Cost of capital =Expected dividend/current price+growth =2/40+6% =11.0%
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A stock sells for $10. The next dividend will be $2 per share. If the return...
Eastern Electric currently pays a dividend of about $1.95 per share and sells for $32 a...
Eastern Electric currently pays a dividend of about $1.95 per share and sells for $32 a share. a.If investors believe the growth rate of dividends is 4% per year, what is the opportunity cost of capital? (Do not round intermediate calculations. Round your answer to 2 decimal places.)Cost of Capital% b.If investors' opportunity cost of capital is 12%, what must be the growth rate they expect of the firm? (Do not round intermediate calculations. Round your answer to 2 decimal...
Eastern Electric currently pays a dividend of about $176 per share and sells for $35 a...
Eastern Electric currently pays a dividend of about $176 per share and sells for $35 a share. a. If Investors believe the growth rate of dividends is 2% per year, what is the opportunity cost of capital? (Do not round Intermediate calculations. Round you answer to 2 decimal places.) Cost of Capital b. If Investors' opportunity cost of capital is 10%, what must be the growth rate they expect of the firm? (Do not round Intermediate calculations. Round your answer...
10. Banyan Co.’s common stock currently sells for $53.25 per share. The growth rate is a...
10. Banyan Co.’s common stock currently sells for $53.25 per share. The growth rate is a constant 5%, and the company has an expected dividend yield of 6%. The expected long-run dividend payout ratio is 50%, and the expected return on equity (ROE) is 10.0%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. What would be the cost of new equity? Do not round intermediate calculations. Round...
ALTERNATIVE DIVIDEND POLICIES Rubenstein Bros. Clothing is expecting to pay an annual dividend per share of...
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Banyan Co.'s common stock currently sells for $47.75 per share. The growth rate is a constant...
Banyan Co.'s common stock currently sells for $47.75 per share. The growth rate is a constant 5%, and the company has an expected dividend yield of 5%. The expected long- run dividend payout ratio is 50%, and the expected return on equity (ROE) is 10.0%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. What would be the cost of new equity? Do not round intermediate calculations. Round...
Secolo Corporation stock currently sells for $50 per share. The market requires a return of 8...
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Banyan Co.'s common stock currently sells for $46.75 per share. The growth rate is a constant...
Banyan Co.'s common stock currently sells for $46.75 per share. The growth rate is a constant 3%, and the company has an expected dividend yield of 4%. The expected long-run dividend payout ratio is 50%, and the expected return on equity (ROE) is 6.0%. New stock can be sold to the public at the current price, but a flotation cost of 15% would be incurred. What would be the cost of new equity? Do not round intermediate calculations. Round your...
Banyan Co.’s common stock currently sells for $48.25 per share. The growth rate is a constant...
Banyan Co.’s common stock currently sells for $48.25 per share. The growth rate is a constant 4%, and the company has an expected dividend yield of 6%. The expected long-run dividend payout ratio is 50%, and the expected return on equity (ROE) is 8.0%. New stock can be sold to the public at the current price, but a flotation cost of 5% would be incurred. What would be the cost of new equity? Do not round intermediate calculations. Round your...
The next dividend payment by Grenier, Inc will be $2.04 per share. The dividends are anticipated...
The
next dividend payment by Grenier, Inc will be $2.04 per share. The
dividends are anticipated to maintain a growth rate of 7 percent
forever. If the stock currently sells for $41.00 per share, what is
the dividend yield? What is the expected capital gains yield?
The next dividend payment by Grenier, Inc., will be $2.16 per share. The dividends are anticipated to maintain a growth rate of 5 percent forever. If the stock currently sells for $44 per share,...
COST OF COMMON EQUITY WITH FLOTATION Banyan Co.'s common stock currently sells for $54.00 per share....
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Eastern Electric currently pays a dividend of about $176 per share and sells for $35 a share. a. If Investors believe the growth rate of dividends is 2% per year, what is the opportunity cost of capital? (Do not round Intermediate calculations. Round you answer to 2 decimal places.) Cost of Capital b. If Investors' opportunity cost of capital is 10%, what must be the growth rate they expect of the firm? (Do not round Intermediate calculations. Round your answer...
Banyan Co.'s common stock currently sells for $47.75 per share. The growth rate is a constant 5%, and the company has an expected dividend yield of 5%. The expected long- run dividend payout ratio is 50%, and the expected return on equity (ROE) is 10.0%. New stock can be sold to the public at the current price, but a flotation cost of 10% would be incurred. What would be the cost of new equity? Do not round intermediate calculations. Round...
Secolo Corporation stock currently sells for $50 per share. The market requires a return of 8 percent on the firm's stock. If the company maintains a constant 2 percent growth rate in dividends, what was the most recent dividend per share paid on the stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) Dividend paid per share
Banyan Co.'s common stock currently sells for $46.75 per share. The growth rate is a constant 3%, and the company has an expected dividend yield of 4%. The expected long-run dividend payout ratio is 50%, and the expected return on equity (ROE) is 6.0%. New stock can be sold to the public at the current price, but a flotation cost of 15% would be incurred. What would be the cost of new equity? Do not round intermediate calculations. Round your...
The
next dividend payment by Grenier, Inc will be $2.04 per share. The
dividends are anticipated to maintain a growth rate of 7 percent
forever. If the stock currently sells for $41.00 per share, what is
the dividend yield? What is the expected capital gains yield?
The next dividend payment by Grenier, Inc., will be $2.16 per share. The dividends are anticipated to maintain a growth rate of 5 percent forever. If the stock currently sells for $44 per share,...
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