A stock investment generated the following annual (total) returns over these 3 years: • 2015: 20% • 2016: 10% ⚫ 2017: -50% What was the geometric average return over the 3 year Period? (Answer to the nearest 0.01%)
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- Using the Value Line Investment Survey report in Exhibit 11.5, find the following information for Apple. What was the amount of revenues (i.e., sales) generated by the company in 2017? What were the latest annual dividends per share and dividend yield? What is the earnings per share (EPS) projection for 2019? How many shares of common stock were outstanding? What were the book value per share and EPS in 2017? How much long-term debt did the company have in the third quarter of 2018?CALCULATING THE WACC Here is the condensed 2019 balance sheet for Skye Computer Company (in thousands of dollars): Skyes earnings per share last year were 3.20. The common stock sells for 55.00. last years dividend (D0) was 2.10, and a flotation cost of 10% would be required to sell new common stock. Security analysts are projecting that the common dividend will grow at an annual rate of 9%. Skyes preferred stock pays a dividend of 3.30 per share, and its preferred stock sells for 30.00 per share. The firms before-lax cost of debt is 10%, and its marginal tax rate is 25%. The firms currently outstanding 10% annual coupon rate, long-term debt sells at par value. The market risk premium is 5%, the risk-free rate is 6%, and Skyes beta is 1.516. The firms total debt, which is the sum of the companys short-term debt and long-term debt, equals 1.2 million. a. Calculate the cost of each capital component, that is, the after-tax cost of debt, the cost of preferred stock, the cost of equity from retained earnings, and the cost of newly issued common stock. Use the DCF method to find the cost of common equity. b. Now calculate the cost of common equity from retained earnings, using the CAPM method. c. What is the cost of new common stock based on the CAPM? (Hint: Find the difference between r1 and rs as determined by the DCF method, and add that differential to the CAPM value for rs.) d. If Skye continues to use the same market-value capital structure, what is the firms WACC assuming that (1) it uses only retained earnings for equity and (2) if it expands so rapidly that it must issue new common stock?During the period from 2011 through 2015 the annual returns on small U.S. stocks were -3.76 percent, 18.79 percent, 46.82 percent, 3.39 percent, and -3.40 percent, respectively.What would a $1 investment, made at the beginning of 2011, have been worth at the end of 2015? (Round answer to 3 decimal places, e.g. 52.750.) Value in 2015 $enter a dollar amount of the investment at the end of 2015 rounded to 3 decimal places What average annual return would have been earned on this investment? (Round answer to 2 decimal places, e.g. 52.75.) Average annual return enter the average annual return per year rounded to 2 decimal places percent per year.
- You inverted $10,000 in a large U.S. stocks at the beginning of 2016 and earned 6% in 2016, 2.0% in 2017, 4.5% in 2018, and 1.6% in 2019. What average return did you earn during the 2016-2019 period?Returns for the Alcoff Company over the last 3 years are shown below. What's the standard deviation of the firm's returns? Year Return2010 21.00%2009 −12.50%2008 25.00%a. RAK Ceramic is currently paying dividend Tk. 3.70 per share, which is expected to grow at aconstant rate per year. Investors required rate of return is 18 percent. Calculate the price of the stockbased on average growth of the stock, and justify your findings to take stock investment decisions.(CMP=77.50 Tk.)Year Dividend per share Growth rate2014 3.25 Tk.2015 3.65 Tk.2016 3.95 Tk.2017 4.25 Tk.2018 5.30 Tk.2019 4.40 Tk.b. Explain different types of common stocks with basic features in light of BD stock market and majorchallenges of DSE to build up investors’ confidence.c. Briefly explain the steps in capital budgeting decision making process with constraints ofimplementation stage.
- During the last four years, you owned two stocks that have had the following annual rates of return. Year KEX KW 2014 0.13 -0.08 2015 0.05 0.21 2016 0.07 0.06 2017 0.09 0.15 Compute the arithmetic mean annual return for EACH stock Compute the standard deviation of the annual rate of return for EACH stock Taking the results of (i) and (ii) into consideration, which stock is preferable? Why? Compute the geometric mean annual return for EACH stockCampbell Supper Co. paid a $0.672 dividend per share in 2013, which grew to $0.82 in 2016. This growth is expected to continue.What is the value of this stock at the beginning of 2017 when the required return is 8.4 percent? (Round the growth rate, g, to 4 decimal places. Round your final answer to 2 decimal places.) Stock value _____.__The realized return of Talkie share and Stock M for the past 5 years are detailed below:Year Talkie Stock M2020 15% 30%2019 5% 7%2018 -5% -3%2017 2% -8%2016 9% 20% Compute the arithmetic mean and standard deviation of returns over the past 5 years for each stock?
- The stock of Z-Tech Plc is currently selling for £10 per share. Earnings per share in the coming year are expected to be £1.50. The company has a policy of paying out 20% of its earnings each year in dividends. The rest is retained and invested in projects that earn a 7% internal rate of return per year. This situation is expected to continue indefinitely. a. Assuming the current market price of the stock reflects its intrinsic value as computed using the constant-growth DDM, what rate of return do Z-Tech’s investors require? b. By how much does Z-Tech’s stock price change if all its earnings are paid as dividends and nothing is reinvested? c. If the company were to increase its dividend payout ratio from 20% to 60%, what would happen to its stock price?a.RAK Ceramic is currently paying dividend Tk. 4.40 per share, which is expected to grow at a constant rate per year. Investors required rate of return is 15 percent. Calculate the price of the stock based on average growth of the stock, and justify your findings to take stock investment decisions.(CMP=77.50 Tk.) year devident groth rate 2014 3.25 TK. 2015 3.65 TK. 2016 3.95 TK. 2017 4.25 TK. 2018 5.30 TK 2019 4.40 TK b. Explain different types of common stocks with basic features in light of BD stock market and majorchallenges of DSEc. Briefly explain the steps in capital budgeting decision making process with constraints of mplementation stage.Assume that the required return for Four Season's stock is 12 percent, and the company has paid the following dividends. Under the constant growth model valuation, what is the value of Four Season's stock? Year Dividend per share 2020 $1.32 2019 $1.21 2018 $1.16 2017 $1.12 a. $21.82 b. $11.00 c. $15.11 d. $19.80
