5. The current stock price of TransContinentalAirways is $65 per share. TCA currently pays an annual...

5. The current stock price of TransContinentalAirways is $65 per share. TCA currently pays an annual per-share dividend of $3. Over the past 5 years this dividend has grown annually at a rate of 23%. A respected analyst assumes that the current growth rate of dividends will hold up for the next 5 years, after which dividend growth will slow to 5% annually. Use the twostagegordon function to compute the cost of equity.

Complete in Excel, please include formulas

Expert Solution

jeff jeffy answered 2 years ago

Alberta Inc. (AI) pays an annual dividend of $1.34 per share. If AI's stock is currently...

Alberta Inc. (AI) pays an annual dividend of $1.34 per share. If AI's stock is currently trading at $21.39 per share, and AI's expected growth rate is 7%, what is AI's expected return?

The current stock price for a company is $48 per share, and there are 5 million...

The current stock price for a company is $48 per share, and there are 5 million shares outstanding. The beta for this firms stock is 1.2, the risk-free rate is 4.2, and the expected market risk premium is 6.4%. This firm also has 120,000 bonds outstanding, which pay interest semiannually. These bonds have a coupon interest rate of 6%, 10 years to maturity, a face value of $1,000, and an annual yield to maturity of 8.1%. If the corporate tax...

The current price of Parador Industries stock is $44 per share. Current sales per share are...

The current price of Parador Industries stock is $44 per share. Current sales per share are $21.35, the sales growth rate is 4 percent, and Parador does not pay a dividend. The expected return on Parador stock is 13 percent. a. Calculate the sales per share one year ahead. (Round your answer to 2 decimal places.) b. Calculate the P/S ratio one year ahead. (Do not round intermediate calculations. Round your answer to 2 decimal places.)

Moutainbrook Company stock is is currently trading at $44 per share. The stock pays no dividends....

Moutainbrook Company stock is is currently trading at $44 per share. The stock pays no dividends. The standard deviation of the returns on the stock is 55%. The continuously compounded interest rate is 6% per year. A three-year European call option on Mountainbrook stock has a strike price of $50 per share. Using the Black-Scholes-Merton model, find the premium per share to four decimal places.

Assume a common stock currently just paid a dividend of $5 per share. The stock’s current...

Assume a common stock currently just paid a dividend of $5 per share. The stock’s current price is $50 per share. It is estimated that the dividend will grow at a constant rate of 6% per year forever. What is the cost of equity?

Silicon Wafer Company currently pays a dividend of $1 per share and has a share price...

Silicon Wafer Company currently pays a dividend of $1 per share and has a share price of $20. a. If this dividend was expected to grow at a 12 percent rate forever, what is the firm’s expected, or required, return on equity using a dividend discount model approach? b. Instead of the situation in Part (a), suppose that the dividend was expected to grow at a 20 percent rate for five years and at 10 percent per year thereafter. Now,...

Celom has 5 million shares of common stock outstanding with a current price per share of...

Celom has 5 million shares of common stock outstanding with a current price per share of $15 per share. The company has 2 million shares of preferred stock outstanding with a current price of $20 per share. The company also has 5,000 bonds outstanding with a par value of $1,000 each and a coupon rate of 6%. The bonds are quoted at 102. What weightings should Celom use for its WACC calculation? Therbo Inc's market weighing's of its debt, preferred...

A stock is currently trading at 36$/share, has annual volatility of 17% and pays no dividends....

A stock is currently trading at 36$/share, has annual volatility of 17% and pays no dividends. The risk-free rate is 6% p.a. continuously compounded and an option trader writes a three-month call which is $4 out-of-the money. What should be the price of this call? What should be the price of this call as a percentage of the current stock price?

1. You own 500 shares of Stock A at a price of $65 per share, 597...

1. You own 500 shares of Stock A at a price of $65 per share, 597 shares of Stock B at $71 per share, and 550 shares of Stock C at $34 per sharer. The betas for the stocks are 1.7, 1.2, and 0.6, respectively. What is the beta of your portfolio? (Do not round intermediate calculations. Round your answer to 2 decimal places.) 2. A stock has an expected return of 13.7 percent, a beta of 1.9, and the...

Suppose a stock had an initial price of $65 per share, paid a dividend of $1.45...

Suppose a stock had an initial price of $65 per share, paid a dividend of $1.45 per share during the year, and had an ending share price of $58. a, Compute the percentage total return. (A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) b. What was the dividend yield and the capital gains yield? (A negative answer should be...

Question