Imagine yourself as a financial manager in a company, and you are requested to provide a financial report including the calculation of the current market rate of return from the investor's perspective for each of the four investment options, taking into consideration the followings: Common stocks available for investment are: 2,500,000 shares of common stock, with a par balance of $1 per share. The current market value of the common share is $24.43 per share. Annual earnings per share $1.95. Bonds available for investment $1,750,000 bonds (A) with an interest of 6.25%, with a current market value of $104 per bond (price of $104 per $100). $2,250,000 Notes B, with an interest rate of 5.75%, with a current market value of $94.50 (price $94.50 per $100 note). The corporate tax rate is 35%. Preferred shares available for investment 950,000 outstanding preferred shares with a par value of $10 with a preferential dividend payment set at 5%. The current market value is $15.63 per Preferred Share

Neha is an analyst at a wealth management firm. One of her clients holds a $7,500 portfolio that consists of four stocks. The investment allocation in the portfolio along with the contribution of risk from each stock is given in the following table: Stock Investment Allocation Beta Standard Deviation Atteric Inc. 35% 0.750 0.53% Arthur Inc. 20% 1.400 0.57% Li Corp. 15% 1.300 0.60% Transfer Fuels Co. 30% 0.300 0.64%   Neha calculated the portfolio’s beta as 0.828 and the portfolio’s expected return as 8.55%. Neha thinks it will be a good idea to reallocate the funds in her client’s portfolio. She recommends replacing Atteric Inc.’s shares with the same amount in additional shares of Transfer Fuels Co. The risk-free rate is 4.00%, and the market risk premium is 5.50%. 1. According to Neha’s recommendation, assuming that the market is in equilibrium, how much will the portfolio’s required return change? 0.86%   0.67%   1.07%   0.99%…

13. Use the following information on Stock X to find the price of a share of stock using the free-cash flow. Assume the annual growth is 4.0% and the WACC is 7.0%. The financial statements below are on Moodle for Exam 2 in case you want to use those to practice-prepare for this question. Answer: Financial Statements at the end of Year Income Statement Sales COGS Gross Profits Depreciation EBIT Interest End of Year 1 $ 68,000.00 $ 45,800.00 $ 22,200.00 $ 1,000.00 $ 21,200.00 $ 97.50 $ 21,102.50 $ 6,330.75 $ 14,771.75 $ Change in Retained Earnings $ 14,771.75 Income Before Taxes Taxes (30%) Net Income Dividends AAAA Balance Sheet Assets Begin. of Year 1 End of Year 1 Llabilities Begin. of Year 1 End of Year 1 Cash $ Inventories $ Net fixed assets $ 5,000.00 $ 6,000.00 $ 28,000.00 $ 10,571.75 4,200.00 39,000.00 Total Assets $ 39,000.00 $ 53,771.75 Notes payable Long term debt Initial paid in capital $ Retained earnings $ Tot. Llab. & Equity $ 1,950.00 $ 37,050.00 $ $ $ 39,000.00 $…

An investor buys 300 shares of stock selling at ​$66 per share using a margin of ​66%. The stock pays annual dividends of $1.00 per share. A margin loan can be obtained at an annual interest cost of 302 ​%. Determine what return on invested capital the investor will realize if the price of the stock increases to ​$88 within six months. What is the annualized rate of return on this​ transaction? Question content area bottom Part 1 If the price of the stock increases to ​$88 within six​ months, the​ six-month return on this transaction is .......................​%. ​ (Round to two decimal​ places.)

7. You invest $7,873 in stock and receive $102, $123, $121, and $155 in dividends over the following 4 years. At the end of the 4 years, you sell the stock for $11,900. What was the IRR on this investment? Review Only Click the icon to see the Worked Solution (Calculator Use). Click the icon to see the Worked Solution (Spreadsheet Use). The IRR on this investment is %. (Round to the nearest whole percent.)

(Preferred stock valuation) Kendra Corporation's preferred shares are trading for $42 in the market and pay a $3.80 annual dividend. Assume that the market's required yield is 11 percent. a. What is the stock's value to you, the investor? b. Should you purchase the stock? a. The value of the stock to you, the investor, is $ per share. (Round to the nearest cent.)

An investor with a required return of 16 percent for very risky investments in common stock has analyzed three firms and must decide which, if any, to purchase. The information is as follows:   Firm   A   B   C   Current earnings $ 2.40 $ 3.50 $ 7.50   Current dividend $ 2.30 $ 2.40 $ 6.70   Expected annual growth rate in   5 % 1 % -2 % dividends and earnings               Current market price $ 23 $ 20 $ 43       What is the maximum price that the investor should pay for each stock based on the dividend-growth model? Round your answers to the nearest cent.   Stock A: $   Stock B: $   Stock C: $     If the investor does buy stock A, what is the implied percentage return? Round your answer to two decimal places.     %   If the appropriate P/E ratio is 11, what is the maximum price the investor should pay for each stock? Round your answers to the nearest cent.   Stock A: $   Stock B: $   Stock C: $   If the appropriate P/E ratio is 4, what is the maximum…

You are considering purchasing a share of preferred stock with the following characteristics:                                                 par value                      =          $100                                     dividend rate               =          12% per year                                     payment schedule       =          quarterly                                     maturity date              =                                              required rate of return =          6% per year                                     current market price    =          $135 per share   Based on this information, answer the following:   A.  What is the dollar amount of the quarterly dividend on this stock?   B.  Using the Discounted Cash Flow Method, what is the dollar value of this stock?   C.  Using the Discounted Cash Flow Method, what is the annual expected return for this stock?   D.  Based on your answer to part B, should you invest in the stock?  Why or why not?   E.…

An investor purchased a stock one year ago for ​$82.00. It paid an annual cash dividend of ​$6.21 and is now worth ​$93.84. What total return did the investor​ earn? Would the investor have experienced a capital​ gain? Explain.     The investor would experience a capital gain   in the amount of ​$11.8411.84.   The total return earned by the investor is ​$enter your response here.   The total percentage return by the investor 22.0722.07​%.

Assume that a firm can issue preferred stock that has a $70 par value and pays a 15.0% annual dividend each year. The firm's investment bankers believe that investors will be willing to pay $84.00 per share and that flotation costs will be equal to $9.97 per share. Given this information, determine the difference between the investor's required rate of return, and the firm's cost of preferred stock. 2.541% O 2.224% O 1.963% 1.398% 1.683%