Davin Wenig, an investor with a 13% required rate of return, wants to buy shares of eBay (ticker symbol: EBAY).  EBAY’s shareholders just received an annual dividend of $2.10 per share. If EBAY has been decreasing its dividends by 11.5% each year, how much will Mr. Wenig be willing to pay today for one share of EBAY? a. $7.59 b. $10.25 c. $18.26 d. $8.02 e. $9.56

(Calculating rates of return) Blaxo Balloons manufactures and distributes birthday balloons. At the beginning of the year Blaxo's common stock was selling for $17.95 but by year end it was only $16.91. If the firm paid a total cash dividend of $1.76 during the year, what rate of return would you have earned if you had purchased the stock exactly one year ago? What would your rate of return have been if the firm had paid no cash dividend? The rate of return you would have earned is %. (Round to two decimal places.)

Suppose Alex has an opportunity to buy shares of Sunnyland Snacks Company. The shares are expected to pay a dividend of $2.50 per share in one year and to sell for $92.00 per share at that time. a. Suppose the current interest rate on safe assets is 5% and Alex believes that investing in Sunnyland is not risky. How much would Alex be willing to pay today for each share of the company? b. Suppose the current interest rate on safe assets is 5%. Alex is willing to pay at most $85.90 for each share of Sunnyland today. Calculate Alex’s risk premium.

You own 1,000 shares of stock in Avondale Corp. You will receive a $.80 per share dividend in one year. In two years, Avondale will pay a liquidating dividend of $45 per share. The required return on Avondale stock is 10 percent. a. What is the current share price of your stock (ignoring taxes)?  b. If you would rather have equal dividends in each of the next two years by creating homemade dividends, what would be the cash flow for Year 1 and Year 2?

Robin Williams is interested in buying stock, in a company that is increasing its dividends at a constant rate of 6.2%. Last year they paid a dividend of $2.65. The required rate of return is 18%. What should be the price of the stock in 5 yrs time? (round 2 decimal places)

7. Doctors' Inc. just paid an annual dividend of $2.00 last week and is currently selling for $25 per share (not necessarily the value). Its dividends are expected to increase by 5% annually. Based on the riskiness of Doctors' Inc's stock, your required rate of return is 15%. What should be your trading strategy on this stock? a. b. C. d. e. Buy the stock at $25.00 if you don't own it as it is worth $21.00 per share. Sell the stock if you own it at $25.00 as it is worth $21.00 per share. Buy the stock at $25.00 if you don't own it as it is worth $28.00 per share. Sell the stock if you own it at $25.00 as it is worth $13.50 per share. Nothing, the stock is fairly priced at $25.00 per share.

You buy stock on margin in your brokerage account when it is trading at $42.76 per share. You have $4050 in equity (cash) in your account and buy 195 shares.   Your broker makes a margin loan so you can pay the difference at an annual rate of 0.0825 One year later the stock price is 44.9   What is the margin percentage in the account one year after the trade is made?   Group of answer choices   0.4933   0.4698   0.4247     0.4447   0.4014

To purchase shares of Paylocity Inc. (ticker symbol: PCTY), Steven Beauchamp requires a return of 8.50%.  Paylocity, which just paid an annual dividend of $1.50 per share, expects to grow its annual dividend by 22% per year for the next 4 years. A 5% constant growth rate is subsequently expected. How much will Mr. Beauchamp pay today for one share of Paylocity? a. $62.36 b. $80.05 c. $67.26 d. $78.22 e. $71.25

How much are you willing to pay for one share of Delphia stock if the company just paid a $1.43 annual dividend last year, the dividends increase by 4 percent annually, and you require a 14 percent rate of return?

Suppose that Brue currently is selling at $50 per share. You buy 900 shares using $36,000 of your own money, borrowing the remainder of the purchase price from your broker. The rate on the margin loan is 7%. What is the percentage increase in the net worth of your brokerage account if the price of Brue immediately changes to (a) $56; (b) $50; and (c)$44?