XYZ currently has common stock trading at $40 per share. XYZ just paid a dividend of $2.00 per share, which is expected to grow at a constant rate of 5%. XYZ's beta is 1.5, the risk-free rate is 2%, and the market return is expected to be 8%. The pre-tax yield on XYZ's bonds is 7%. XYZ's finance department believes that new stock would require a premium of 5% over their own bond yield. Flotation cost for issuing new stock is 10%. Compute the cost of retained earnings using the bond yield plus risk premium approach (show your answer in percent, and to 2 decimal places. Example: 9.62%).
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XYZ currently has common stock trading at $40 per share. XYZ just paid a dividend of...
XYZ currently has common stock trading at $40 per share. XYZ just paid a dividend of $2.00 per share, which is expected to grow at a constant rate of 5%. XYZ's beta is 1.5, the risk-free rate is 2%, and the market return is expected to be 8%. The pre-tax yield on XYZ's bonds is 7%. XYZ's finance department believes that new stock would require a premium of 5% over their own bond yield. Flotation cost for issuing new stock is 10%....
Portman Industries just paid a dividend of $1.20 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 12.00% over the next year. After the next year, though, Portman's dividend is expected to grow at a constant rate of 2.40% per year. The risk free rate is 3.00%, the market risk premium is 3.60% and Portman's beta is 1.10. Assuming that the market is at equalibrium, complete the table. What...
Apple has a beta of 0.92 and just paid a dividend of 54 cents per share. Its dividends are expected to grow at a rate of 11%. If the risk-free rate is 1.8% and the market risk premium is 14%, what is the fair price of a share of Apple stock
Cost of Equity: Dividend Growth Summerdahl Resort's common stock is currently trading at $24.00 a share. The stock is expected to pay a dividend of $2.00 a share at the end of the year (D1 = $2.00), and the dividend is expected to grow at a constant rate of 7% a year. What is the cost of common equity? Round your answer to two decimal places.?
A company just paid a dividend of $1.95 per share, and that dividend is expected to grow at a constant rate of 4.50% per year in the future. The company's beta is 1.65, the market risk premium is 8.5%, and the risk-free rate is 5.50%. What is the company's current stock price? $12.72 $13.56 $14.53 $15.64 $16.94
The Peter Inc just paid a dividend of $1.0 per share, and that dividend is expected to grow at a constant rate of 5.50% per year in the future. The company's beta is 1.15, the market risk premium is 5.00%, and the risk-free rate is 4.00%. What is Peter’s current stock price, P0?
termediate Prablems COST OF COMMON EQUITY The future earnings, dividends, and common stock price of Carpetto Technologies Inc. are expected to grow 7% per year. Carpetto's common stock currently sells for $23.00 per share; its last dividend was $2.00; and it will pay a $2.14 dividend at the end of the current year. a. Using the DCF approach, what is its cost of common equity? b. If the firm's beta is 1.6, the risk-free rate is 9%, and the average...
Portman Industries just paid a dividend of $1.92 per share. The company expects the coming year to be very profitable, and its dividend is expected to grow by 20.00% over the next year. After the next year, though, Portman's dividend is expected to grow at a constant rate of 4.00% per year. The risk-free rate (rRF) is 5.00%, the market risk premium (RPM) is 6.00%, and Portman's beta is 1.70. Term Value Dividends one year from now (D1) Horizon value...
2. Summerdahl Resort's common stock is currently trading at $36.00 a share. The stock is expected to pay a dividend of $2.50 a share at the end of the year (D1 = $2.50), and the dividend is expected to grow at a constant rate of 4% a year. What is the cost of common equity? Round your answer to two decimal places. 3. Booher Book Stores has a beta of 1.1. The yield on a 3-month T-bill is 4.5% and...
Question 9 (1 point) A stock is trading for 10, and just paid a dividend of 1.3 which is expected to grow at a fraction 0.11 per year. If Goldman Sacs charges a fraction 0.14 as a flotation cost, what is the required rate of return on a new stock issue? Your Answer: