Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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If share price rises from $10 to $12 per share, and pays a dividend of $1 per share, what was the
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- Kalil, Inc. (a for-profit college), has the following data: average stock return (market rate of return) is 7%; market risk premium is 5%. and b = 0. What is the firm's cost of equity (k) from retained earnings based on the CAPM? 12arrow_forwardDorpac Corporation has a dividend yield of 1.7%. Its equity cost of capital is 7.7%, and its dividends are expected to grow at a constant rate. a. What is the expected growth rate of Dorpac's dividends? b. What is the expected growth rate of Dorpac's share price?arrow_forwardUsing the constant dividend growth model, determine the percentage price change in a share when the required rate of return decreases from 19 to 17 per cent combined with a decrease in the dividend growth rate from 11 to 9 per cent. Select one: A. fall less than 2% B. rise more than 2%. C. rise less than 3% D. fall more than 2%arrow_forward
- Find cost of equity if the last dividend paid was $4.00 per share (Do). Current stock price is $32.00. Required return to shareholders is 7%. Return on Equity is 12% and dividend retention ratio is 30%.arrow_forwardIf a company has just paid a dividend of $4 per share and never expects to pay another dividend forevor, what is the pprice of this share if the discount rate is 10%?arrow_forwardThe stock of North American Danduff Company is selling at $80 per share. The firm pays a divdend of $2.50 per share. a) What is the dividend yield? b) If the firm has a payout rate of 50% , what is the firm's P/E ratio?arrow_forward
- What is the price of a share today if dividend today (D0) is $5, discount rate (R) 10%, and dividend growth rate (g) 3%. (Explain and show all calculations.)arrow_forwardAnle Corporation has a current stock price of $19.49 and is expected to pay a dividend of $1.25 in one year. Its expected stock price right after paying that dividend is $21.26. a. What is Anle's equity cost of capital? b. How much of Anle's equity cost of capital is expected to be satisfied by dividend yield and how much by capital gain?arrow_forwardWhat effect would the calculation performed have in terms of shareholder value? In other words, suppose the company’s goal is to maximize shareholder value. How will increasing its dividend per share by 1.75 support or inhibit that goal? Be sure to justify reasoning.arrow_forward
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