The Sisyphean Company's common stock is currently trading for $27.25 per share. The stock is expected to pay a $2.60 dividend at the end of the year and the Sisyphean Company's equity cost of capital is 14%. If the dividend payout rate is expected to remain constant, then the expected growth rate in the Sisyphean Company's earnings is closest to: OA. 8.92% OB. 2.23% OC. 6.69% OD. 4.46% ***
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- The common stock of Eddie's Engines, Inc. sells for $15.75 a share. The stock is expected to pay $075 per share next month when the annual dividend is distributed. Eddie's has established a pattern of increasing its dividends by 49% annually and expects to continue doing so. What is the market rate of return on this stock?The Duo Growth Company just paid a dividend of $1.00 per share. The dividend is expected to grow at a rate of 24% per year for the next three years and then to level off to 5% per year forever. You think the appropriate market capitalization rate is 19% per year. a. What is your estimate of the intrinsic value of a share of the stock? (Use intermediate calculations rounded to 4 decimal places. Round your answer to 2 decimal places.) Answer is complete and correct. Intrinsic value per share b. If the market price of a share is equal to this intrinsic value, what is the expected dividend yield? (Use intermediate values rounded to 2 decimal places. Round your answer to 2 decimal places.) Expected dividend yield $ Expected price 11.74✔ ✔ Answer is complete and correct. 10.56 % c. What do you expect its price to be one year from now? (Use intermediate values rounded to 4 decimal places. Round your answer to 2 decimal places.) X Answer is not complete. Implied Capital Gain d-1. What is the…The Evanec Company's next expected dividend, D1, is $3.18; its growth rate is 6%; and its common stock now sells for $36. New stock (external equity) can be sold tonet $32.40 a share.What is Evanec's percentage flotation cost, F?
- You may purchase 100 shares of Mun Tee ltd on a 55 percent margin when the shares are selling at K20 each. The Lusaka stock exchange broke charges you 10 percent annual interest,and commission are 3 percent of total stock value on both the purchase and the sale. If a year later you receive a K0.50 per share dividend and sell the stock for K27. What's your rate of return on investment?You are a financial analyst for the ABC Company. The director of capital budgeting has asked you to analyse a proposed capital investment 'Projects A' which promises the cashflows as shown below. The project has a cost of capital of 6%. Calculate the project's DPBP, NPV and Pl. Based on all those parameters, would you recommend investing into this project and why? Use the table and fields below to complete the task. Time 1 Cash flow -€7,000 €5,500 €1,000 €2,000 Discounted cash flow Accumulated discounted cash flow NPV PI (show the calculation) DPBP (show the calculation)If the dividend paid last year was $3.50, at a constant growth rate of 5%, and investors demand a 20% rate of return, what is the value of the common stock of ABD Company?
- The Duo Growth Company just paid a dividend of $1.00 per share. The dividend is expected to grow at a rate of 26% per year for the next three years and then to level off to 5% per year forever. You think the appropriate market capitalization rate is 21% per year. Required: a. What is your estimate of the intrinsic value of a share of the stock? Note: Use intermediate calculations rounded to 4 decimal places. Round your answer to 2 decimal places. b. If the market price of a share is equal to this intrinsic value, what is the expected dividend yield? Note: Use intermediate values rounded to 2 decimal places. Round your answer to 2 decimal places. c. What do you expect its price to be one year from now? Note: Use intermediate values rounded to 4 decimal places. Round your answer to 2 decimal places. d-1. What is the implied capital gain? Note: Use intermediate values rounded to 2 decimal places. Round your answer to 4 decimal places. d-2. Is the implied capital gain…The Duo Growth Company just paid a dividend of $1.00 per share. The dividend is expected to grow at a rate of 26% per year for the next three years and then to level off to 5% per year forever. You think the appropriate market capitalization rate is 21% per year. Required: a. What is your estimate of the intrinsic value of a share of the stock? Note: Use intermediate calculations rounded to 4 decimal places. Round your answer to 2 decimal places. b. If the market price of a share is equal to this intrinsic value, what is the expected dividend yield? Note: Use intermediate values rounded to 2 decimal places. Round your answer to 2 decimal places. c. What do you expect its price to be one year from now? Note: Use intermediate values rounded to 4 decimal places. Round your answer to 2 decimal places. d-1. What is the implied capital gain? Note: Use intermediate values rounded to 2 decimal places. Round your answer to 4 decimal places. d-2. Is the implied capital gain consistent with your…John wants to invest $1 000 000. He has two options. The first option is to buy government bonds that earn 4% annually. The second option is to buy an apartment building that brings him $100 000 per year in revenues. Compare the two options in terms of their internal rates of return. (Your answer in the answer box should be either 1 or 2). Calculations should be provided.
- A pharmaceutical company has spent $500 million to date working on a blood pressure treatment. It has to decide whether to spend another $500 million today to get final approval from the FDA in two years. Once approved, expected profits will be $50 million per year for the foreseeable future. The firm’s cost of capital is 5%. Should the firm proceed? (Hint: use the perpetuity formula used to value projects found in the readings to find the value of the profit stream that starts in two years, and then discount that.) 2. Suppose some doctors do not see any advantage of using the drug over what they currently prescribe for patients and the profit stream is only $25 million per year. Should the firm proceed? 3. Going back to the original information, suppose there is a delay of a year in getting FDA approval. Should the firm proceed? 4. Going back to the original information, suppose the firm’s’ cost of capital is 10%. Should the firm proceed?Matollows and 250 shillings in the following year. After that, dividends are expected to grow at constant 5% per year. If the required rate of return is 10%, what price should investors pay for such shares today? 4. Suppose a firm is considering a project that would require an initial cash outlay of 15 million shillings and expected to generate shs 4.5 million each year for the next 4 years. The firm assumes that the prices and costs increases at the same rate and that the required rate of return expressed in nominal terms is 14%. The firm also practices a policy whereby cash flows are stated at the prices of period zero. The inflation rate is expected to be 5%. (a)Outline two ways in which the effects that inflation has on the acceptability of investment projects could be considered. (b)Using the NPV technique, is the project worth taking? What have you learned from your analysis as far as treating inflation in investment analysis is concerned? 30/2021 4:39:41 PM Page 1 of 2What is the value of the common stock of ABD Company if the dividend paid last year was $3.50, at a constant growth of 5 percent and investors require a 20% rate of return?