The following table contains prices and dividends for a stock. All prices are after the dividend has been paid. If you bought the stock on January 1 and sold it on December​ 31, what is your realized​ return?  ​Hint: Make sure to round all intermediate calculations to at least five decimal places.

Your realized return is? (Round to one decimal​ place.)

If the path you chose was different from the first path you took, briefly explain in the space below those differences and whether you have reconsidered anything about managing your finances as they relate to your health and your college goals. If you chose the same path again, feel free to explain why you felt strongly about making the same choices. write essay of 500 words

True or False: The following statement accurately describes how firms make decisions related to issuing new common stock.

If a firm needs additional capital from equity sources once its retained earnings breakpoint is reached, it will have to raise the capital by issuing new common stock.

True: Firms will raise all the equity they can from retained earnings before issuing new common stock, because capital from retained earnings is cheaper than capital raised from issuing new common stock.

False: Firms raise capital from retained earnings only when they cannot issue new common stock due to market conditions outside of their control.

White Lion Homebuilders is considering investing in a one-year project that requires an initial investment of $500,000. To do so, it will have to issue new common stock and will incur a flotation cost of 2.00%. At the end of the year, the project is expected to produce a cash inflow of $595,000. The rate of return that White Lion expects to earn on its project (net of its flotation costs) is    (rounded to two decimal places).

Alpha Moose Transporters has a current stock price of $33.35 per share, and is expected to pay a per-share dividend of $1.36 at the end of the year. The company’s earnings’ and dividends’ growth rate are expected to grow at the constant rate of 5.20% into the foreseeable future. If Alpha Moose expects to incur flotation costs of 3.750% of the value of its newly-raised equity funds, then the flotation-adjusted (net) cost of its new common stock (rounded to two decimal places) should be   .

White Lion Homebuilders Co.’s addition to earnings for this year is expected to be $745,000. Its target capital structure consists of 40% debt, 5% preferred, and 55% equity. Determine White Lion Homebuilders’s retained earnings breakpoint:

$1,422,272

$1,557,727

$1,862,500

$1,354,545

Johnson Enterprises’s stock is currently selling for $25.67 per share, and the firm expects its per-share dividend to be $2.35 in one year. Analysts project the firm’s growth rate to be constant at 7.27%. Using the cost of equity using the discounted cash flow (or dividend growth) approach, what is Johnson’s cost of internal equity?

22.17%

20.53%

17.24%

16.42%

It is often difficult to estimate the expected future dividend growth rate for use in estimating the cost of existing equity using the DCF or DG approach. In general, there are three available methods to generate such an estimate:

Suppose Johnson is currently distributing 45% of its earnings in the form of cash dividends. It has also historically generated an average return on equity (ROE) of 24%. Johnson’s estimated growth rate is   %.

The WACC is used as the discount rate to evaluate various capital budgeting projects. However, it is important to realize that the WACC is an appropriate discount rate only for a project of average risk.

Analyze the cost of capital situations of the following company cases, and answer the specific questions that finance professionals need to address.

Consider the case of Turnbull Co.

Turnbull Co. has a target capital structure of 45% debt, 4% preferred stock, and 51% common equity. It has a before-tax cost of debt of 8.2%, and its cost of preferred stock is 9.3%.

If Turnbull can raise all of its equity capital from retained earnings, its cost of common equity will be 12.4%. However, if it is necessary to raise new common equity, it will carry a cost of 14.2%.

If its current tax rate is 40%, how much higher will Turnbull’s weighted average cost of capital (WACC) be if it has to raise additional common equity capital by issuing new common stock instead of raising the funds through retained earnings? (Note: Round your intermediate calculations to two decimal places.)

0.92%

1.10%

1.01%

1.20%

Turnbull Co. is considering a project that requires an initial investment of $270,000. The firm will raise the $270,000 in capital by issuing $100,000 of debt at a before-tax cost of 10.2%, $30,000 of preferred stock at a cost of 11.4%, and $140,000 of equity at a cost of 14.3%. The firm faces a tax rate of 40%. What will be the WACC for this project?      (Note: Round your intermediate calculations to three decimal places.)

Consider the case of Kuhn Co.

Kuhn Co. is considering a new project that will require an initial investment of $4 million. It has a target capital structure of 45% debt, 4% preferred stock, and 51% common equity. Kuhn has noncallable bonds outstanding that mature in five years with a face value of $1,000, an annual coupon rate of 10%, and a market price of $1,050.76. The yield on the company’s current bonds is a good approximation of the yield on any new bonds that it issues. The company can sell shares of preferred stock that pay an annual dividend of $8 at a price of $95.70 per share.

Kuhn does not have any retained earnings available to finance this project, so the firm will have to issue new common stock to help fund it. Its common stock is currently selling for $22.35 per share, and it is expected to pay a dividend of $1.36 at the end of next year. Flotation costs will represent 3% of the funds raised by issuing new common stock. The company is projected to grow at a constant rate of 8.7%, and they face a tax rate of 40%. What will be the WACC for this project?      (Note: Round your intermediate calculations to two decimal places.)

Moerdyk Corporation's bonds have a 15-year maturity, a 5.25% coupon rate with interest paid semiannually, and a par value of $1,000. The nominal required rate of return on these bonds is 6.50%. What is the bond’s intrinsic value? Enter your answer rounded to two decimal places. Do not enter $ or comma in the answer box. For example, if your answer is $12,300.456 then enter as 12300.46 in the answer box.

Assume that you are considering the purchase of a 30 year bond with an annual coupon rate of 7.50%. The bond has a face value of $1,000 and makes semiannual interest payments. If you require a 5.75% nominal yield to maturity on this investment, what is the maximum price you should be willing to pay for this bond?

Marsha Jones has bought a used Mercedes horse transporter for her Connecticut estate. It cost $43,000. The object is to save on horse transporter rentals.

Marsha had been renting a transporter every other week for $208 per day plus $1.40 per mile. Most of the trips are 80 or 100 miles in total. Marsha usually gives Joe Laminitis, the driver, a $35 tip. With the new transporter she will only have to pay for diesel fuel and maintenance, at about $0.53 per mile. Insurance costs for Marsha’s transporter are $1,600 per year.

The transporter will probably be worth $23,000 (in real terms) after eight years, when Marsha’s horse Spike will be ready to retire. Assume a nominal discount rate of 9% and a 2% forecasted inflation rate. Marsha’s transporter is a personal outlay, not a business or financial investment, so taxes can be ignored.

Calculate the NPV of the investment.

1- Commonwealth Construction (CC) needs $3 million of assets to get started, and it expects to have a basic earning power ratio of 30%. CC will own no securities, all of its income will be operating income. If it so chooses, CC can finance up to 40% of its assets with debt, which will have a 12% interest rate. If it chooses to use debt, the firm will finance using only debt and common equity, so no preferred stock will be used.

Assuming a 25% tax rate on taxable income, what is the difference between CC's expected ROE if it finances these assets with 40% debt versus its expected ROE if it finances these assets entirely with common stock? Round your answer to two decimal places.

2- Assume the following relationships for the Caulder Corp.:

Sales/Total assets 2.2×

Return on assets (ROA) 4.0%

Return on equity (ROE) 9.0%

Calculate Caulder's profit margin and debt-to-capital ratio assuming the firm uses only debt and common equity, so total assets equal total invested capital. Do not round intermediate calculations. Round your answers to two decimal places. Profit margin: % Debt-to-capital ratio: %

You are considering making a movie. The movie is expected to cost $ 10.3 million upfront and take a year to make. After​ that, it is expected to make $ 4.4 million in the first year it is released​ (end of year​ 2) and $ 1.9 million for the following four years​ (end of years 3 through​ 6) . What is the payback period of this​ investment? If you require a payback period of two​ years, will you make the​ movie? What is the NPV of the movie if the cost of capital is 10.1 % ​? According to the NPV​ rule, should you make this​ movie? What is the payback period of this​ investment?