The current (time zero) price of one share of farell corporation's common stock is $25. The price is expected to increase by $5 over the coming year. The company is not expected to pay a dividend during the year. The standard deviation of the expected price change is $3. The distribution of the end of year possible prices is approximately normal. Determine the probability of earning a return greater than 30 percent over the coming year from your investment in farell common stock.

The stock of Alpha Tool sells for $18.30 per share. Its current dividend rate, D0, is $2 per share. Analysts and investors expect Alpha to increase its dividends at a 10 percent rate for each of the next 2 years. This annual dividend growth rate is expected to decline to 6 percent for years 3 and 4 and then to settle down to 4 percent per year forever. Calculate the cost of internal equity for Alpha Tool. Use Table II for your calculations. Round your answer to the nearest whole number.   %

The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 7% per year. Callahan's common stock currently sells for $25.25 per share; its last dividend was $2.00; and it will pay a $2.14 dividend at the end of the current year. Using the DCF approach, what is its cost of common equity? Do not round intermediate calculations. Round your answer to two decimal places.  % If the firm's beta is 2.0, the risk-free rate is 6%, and the average return on the market is 13%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places.  % If the firm's bonds earn a return of 11%, based on the bond-yield-plus-risk-premium approach, what will be rs? Use the midpoint of the risk premium range discussed in Section 10-5 in your calculations. Round your answer to two decimal places.  % If you have equal confidence in the inputs used for the three approaches, what is your estimate of Callahan's cost…

Consider an example. Assume a share of preferred stock with the following characteristics:                                       Par value                     $100                                     Dividend rate              3.0% per year                                     Payment schedule       semiannual                                     Maturity date   You are analyzing this preferred stock for possible purchase.  Your required rate of return on this stock is 5% per year, compounded semiannually.    Draw a time line showing the expected dividends for this preferred stock.   Calculate the value of this preferred stock based on the required rate of return.   Assume that the current market price for this preferred stock is $75 per share. Calculate the expected return based on the market price.   Should you invest in the stock?   Why or why not?  Be sure to use your results                               from BOTH parts B and C above.   You are analyzing a share of XYZ…

Analysts expect the following dividends from SE Corp.: a dividend of $2.74 per share will be paid tomorrow. One year from now a dividend of $3.14 will be paid, two years from now a dividend of $3.88, and thereafter dividends are expected to grow at a constant rate of 7% per year permanently. According to the analysts, the cost of equity of the company will remain at 9.7%. The current share price is closest to (nearest cents): a. $136.60b. $125.30c. $133.86d. $131.12

Meadow Dew Corporation currently has an EPS of $4.00, and the benchmark PE for the company is 39. Earnings are expected to grow at 5 percent per year. a. What is your estimate of the current stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What is the target stock price in one year? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. Assuming the company pays no dividends, what is the implied return on the company's stock over the next year? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) a. Current stock price b. Target stock price c. Implied return of stock %

The stock of Business Adventures sells for $30 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows: Boom Normal economy Recession Dividend $ 2.00 1.40 0.50 Required: a. Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Expected return Standard deviation Answer is complete and correct. Stock Price $ 40 34 25 14.33 22.60 Expected return Standard deviation b. Calculate the expected return and standard deviation of a portfolio invested half in Business Adventures and half in Treasury bills. The return on bills is 5%. (Do not round intermediate calculations. Round your answers to 2 decimal places.) % % Answer is complete but not entirely correct. 8.75 11.30 % %

Boehm Incorporated is expected to pay a $2.70 per share dividend at the end of this year (i.e., D1 = $2.70). The dividend is expected to grow at a constant rate of 8% a year. The required rate of return on the stock, rs, is 16%. What is the estimated value per share of Boehm's stock? Do not round intermediate calculations. Round your answer to the nearest cent.

The stock of Business Adventures sells for $65 a share. Its likely dividend payout and end-of-year price depend on the state of the economy by the end of the year as follows: Boom Normal economy Recession Expected return Standard deviation Dividend $2.40 1.60 0.85 Required: a. Calculate the expected holding-period return and standard deviation of the holding-period return. All three scenarios are equally likely. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Expected return Standard deviation Stock Price $73 66 57 % % b. Calculate the expected return and standard deviation of a portfolio invested half in Business Adventures and half in Treasury bills. The return on bills is 3%. (Do not round intermediate calculations. Round your answers to 2 decimal places.) %

Arcs and Triangles paid an annual dividend of $1.47 a share last month. The company is planning on paying $1.52, $1.58, and $1.60 a share over the next three years, respectively. After that, the dividend will be constant at $1. 85 per share per year. What is the market price of this stock if the market rate of return is 13.5 percent?