Ginger Industries stock has a beta of 1.27. The company just paid a dividend of $.77, and the dividends are expected to grow at 5.2percent. The expected return on the market is 11.7 percent, and Treasury bills are yielding 5.2 percent. The most recent stock price is$81.50.a. Calculate the cost of equity using the dividend growth model method.Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.b. Calculate the cost of equity using the SML method.Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.a. Cost of equityb. Cost of equity%%

Step 1: Given Value for Calculation Beta = b = 1.27Current Dividend = d0 = $0.77Growth Rate = g =…

Answered: Ginger Industries stock has a beta of…

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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Suppose a stock had an initial price of $92 per share, paid a dividend of $2.30 per share during the year, and had an ending share price of $75.50. a. Compute the percentage total return. Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. b. What was the dividend yield? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. c. What was the capital gains yield? Note: A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g.132.16. Answer is complete but not entirely correct. a. Percentage total return b. Dividend yield c. Capital gains yield 13.04% 13.04% 14.62%
Howard, LLC has an equity beta of 1.3. The company just paid an annual dividend of $0.30, and the dividends are expected to grow at 4 percent per year. The expected return on the market is 13%. The most recent stock price was $80. Calculate the cost of equity using the Dividend Discount Method.
Analogue Technology has preferred stock outstanding that pays a $18.80 annual dividend. It has a price of $204. What is the required rate of return (yield) on the preferred stock? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)
Epley Industries stock has a beta of 1.25. The company just paid a dividend of $.40, and the dividends are expected to grow at 5 percent. The expected return on the market is 12 percent, and Treasury bills are yielding 6.1 percent. The most recent stock price for the company is $78. a. Calculate the cost of equity using the DCF method. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) DCF method % b. Calculate the cost of equity using the SML method. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) SML method % eBook & Resources eBook: 14.2. The Cost of Equity Check my work
Your assignment here is to value Walmart Inc.'s (WMT’s) stock. A bit oddly, WMT is not expected to pay a dividend at t = 1. WMT’s next dividend (i.e., the dividend at t = 2) is expected to be $3.00/share. Across years 3 and 4 and 5, dividends will grow by 8%/year. After that, dividends are projected to grow at a constant rate of 3% forever. Walmart has a debt-to-equity ratio (in market-value terms) of 1.0. The yield to maturity on WMT's bonds averages 4% and the company's tax rate is 30%. If the risk-free rate is 3.1%, the expected return on the market is 9.1%, and WMT's equity beta is 1.10, calculate a fair price at which the stock should sell for today, based on a discounted valuation of its projected dividends.
Suppose Wacken, Limited just issued a dividend of $2.60 per share on its common stock. The company paid dividends of $2.10, $2.17, $2.34, and $2.44 per share in the last four years. If the stock currently sells for $79, what is your best estimate of the company's cost of equity capital using arithmetic and geometric growth rates? Note: Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16. Cost of equity using arithmetic growth rate Cost of equity using geometric growth rate % %
Prepare two estimates of Pearson’s cost of common equity using the dividend growth model where you use growth rates in dividends that are 25% lower than the estimated 6.25% and growth rates in dividends that are 25% greater than the estimated 6.25%. The current dividend is R0.49 per share and the price of common stock is R19.39.
Ginger Industries stock has a beta of 1.33. The company just paid a dividend of $.83, and the dividends are expected to grow at 5.3 percent. The expected return on the market is 11.8 percent, and Treasury bills are yielding 5.3 percent. The most recent stock price is $83.00. Calculate the cost of equity using the dividend growth model method. Calculate the cost of equity using the SML method.
A biotechnology company's stock is currently selling for $48.35 per share. The earnings per share are $2.14, and the dividend is $1.80. (a) What is the current yield of the stock (as a %)? (Round your answer to the nearest tenth of a percent.) % (b) What is the price-earnings ratio? (Round your answer to the nearest whole number.)
Ran Company wants to determine its cost of common stock equity using the CAPM. The company's investment advisors indicate that the firm’s beta is equals to 1.3;the risk-free rate is 6%; and the market return is 10%. (Do not round off between computations. Round off the final answer to two decimal places. Example of writing your answer 2.58%)
A biotechnology company's stock is currently selling for $48.35 per share. The earnings per share are $2.14, and the dividend is $1.60. (a) What is the current yield of the stock (as a %)? (Round your answer to the nearest tenth of a percent.) % (b) What is the price-earnings ratio? (Round your answer to the nearest whole number.)
A share of common stock just paid a dividend of $5. If the expected long-run growth rate for this stock is 2%, and if investors' required rate of return is 8.5%, then what is the stock price? Round your final answer to 2 decimal places. Do not round any intermediate calculation.

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