Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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- Hubbard Industries just paid a common dividend, D0, of $1.60. It expects to grow at a constant rate of 3% per year. If investors require a 9% return on equity, what is the current price of Hubbard's common stock? Do not round intermediate calculations. Round your answer to the nearest cent.arrow_forwardWestlake Company's stock has an estimated beta of 1.5 and the company just paid a dividend of $2 per share. Westlake is expected to grow its dividends at 5% p.a. indefinitely. The risk-free interest rate is 4% per annum, and the estimated market risk premium is 6%. 1. Use the CAPM to calculate Westlake' required rate of return. 2. Estimate Westlake's intrinsic value per share.arrow_forwardA common stock is expected that the earnings and dividends will grow at a rate of 25% for the next 4 years, after the growth rate in earnings and dividends will fall to zero, i.e., g = 0. The company’s last dividend, D0, was ₱1.25, its beta is 1.20, the market risk premium is 5.50%, and the risk-free rate is 3.00%. What is the current price of the common stock?arrow_forward
- 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.arrow_forwardStock in Daenerys Industries has a beta of 1.02. The market risk premium is 8 percent, and T-bills are currently yielding 5.5 percent. The company's most recent dividend was $2 per share, and dividends are expected to grow at a 6 percent annual rate indefinitely. If the stock sells for $32 per share, what is your best estimate of the company's cost of equity? Multiple Choice 8.05% 13.66% 13.14% 10.54% O 12.63%arrow_forwardSchnusenberg Corporation just paid a dividend of DO $2.10 per share, and that dividend is expected to grow at a constant rate of 6.50% per year in the future. The company's beta is 2.00, the required return on the market is 14.50%, and the risk - free rate is 4.50%. What is the company's current stock price? Do not round intermediate calculations. a. $12.43 b. $11.67 c. $9.13 d. $27.96 e. $34.41 =arrow_forward
- Runtan Inc. has just paid an annual dividend of $0.45 per share. Analysts expect the firm's dividends to grow by 6% forever. Its stock price is $34.8 and its beta is 1. The risk-free rate is 2% and the expected return on the market portfolio is 8%. What is the best guess for the cost of equity?arrow_forwardA stock is selling for $80 in the market. The company’s beta is 1.5, the market risk premium (rM - rF) is 6%, and the risk-free rate is 2%. The most recent dividend paid is D0 = $2 and dividends are expected to grow at a constant rate g. What’s the dividend growth rate g for this stock? find the stock’s capital gain yield. 8.29% 4.19% 7.68% 7.81%arrow_forwardBurkhead Sales just paid an annual dividend of $0.70, and the dividend is expected to grow at a constant rate of 7.00% in the future. If the required return on Burkhead’s stock is 10.50%, what is the intrinsic price of the shares?arrow_forward
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