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In: Finance
A company has a beta of 0.75. The risk-free rate is 4.65% and the market risk...
A company has a beta of 0.75. The risk-free rate is 4.65% and the market risk premium is 7.80%. The company is expected to pay annual dividends. The first dividend is expected to be paid in 4 years and is expected to be $1.30. The dividend in year 5 is expected to be $2.30, and then the dividend is expected to grow 1.5% annually thereafter. What should the price of the stock be?
Solutions
jeff jeffy answered 2 years agoRelated Solutions
The market capitalization of this company is $140 million, it's beta is 0.75, the risk free...
The market capitalization of this company is $140 million, it's
beta is 0.75, the risk free rate is 2% and the market risk premium
is 6%.
The project costs $1 million and has expected cashflows of
$75,000 a year forever. This same firm now realizes that the
project they were considering before has a timing option.
Specifically, they can wait a year to see if the product the
project will create will catch on in the market, or not. At...
A stock has a beta of 0.75. The risk-free rate is 9%, and the market risk premium is 8%. What is the stock’s required rate of return?
REQUIRED RATE OF RETURN A stock has a beta of
0.75. The risk-free rate is 9%, and the market risk premium is 8%.
What is the stock’s required rate of return?
A stock has an expected return of 0.07, its beta is 0.75, and the risk-free rate...
A stock has an expected return of 0.07, its beta is 0.75, and
the risk-free rate is 0.03. What must the expected return on the
market be? Enter the answer with 4 decimals (e.g. 0.0567).
A company has unleveraged beta of 1.7, risk free rate 7% and market risk premium for...
A company has unleveraged beta of 1.7, risk free rate
7% and market risk premium for 5%. The applicable tax rate is
40%.
The company needs to finance its new project having three different
scenarios of financing:
Scenario Debt ratio Interest rate (before tax)
EPS
1 0% 0% $2.7
2 20% 12% $3.8
3 80% 17% $4.2
2) If the company is unleveraged, its Price per share
is *
$11.75
$22.41
$17.42
None of the above
3) If the company...
If a company has a beta of 1.3, risk free rate 3% and market index return...
If a company has a beta of 1.3, risk free rate 3% and market
index return 8% Q5: what is market risk premium? what is cost of
equity?
Zetta Company has unleveraged beta 1.3, risk free rate 7% and market risk premium for 5%....
Zetta Company has unleveraged beta 1.3, risk free rate 7% and
market risk premium for 5%. The applicable tax rate is 40%. The
company needs to finance its new project under two different
scenarios.
Scenario Debt ratio Interest rate EPS
1 0% 0% $2.40
2 30% 10% $3.40
6. WACC under scenario number 2 equals to *
a)12.42%
b)11.55%
c)13.50%
d)14.24%
e)None of the above
7. The price per share under scenario number 2 equals to *
a)$28.50
b)$26.50
c)$24.30...
Zetta Company has unleveraged beta 1.3, risk free rate 7% and market risk premium for 5%....
Zetta Company has unleveraged beta 1.3, risk free rate 7% and
market risk premium for 5%. The applicable tax rate is 40%. The
company needs to finance its new project under two different
scenarios.
Scenario Debt ratio Interest rate EPS
1 0% 0% $2.40
2 30% 10% $3.40
6. WACC under scenario number 2 equals to *
a)12.42%
b)11.55%
c)13.50%
d)14.24%
e)None of the above
7. The price per share under scenario number 2 equals to *
a)$28.50
b)$26.50
c)$24.30...
If the market risk premium is 2%, the risk-free rate is 4.4% and the beta of...
If the market risk premium is 2%, the risk-free rate is 4.4% and
the beta of a stock is 1.2, what is the expected return of the
stock?
Vanessa Inc has a beta of .7. The market risk premium is 8% and risk-free rate...
Vanessa Inc has a beta of .7. The market risk premium is 8% and
risk-free rate is 5%. Vanessa Inc’s last dividend was
$1.20 per share, and the dividend is expected to grow at 7%
indefinitely. The stock price is currently $40. Vanessa
Inc’s target capital structure is 30% debt and 70% equity. It cost
of debt is 10% before taxes. The tax rate is 40%.
a) Calculate the cost of equity under:
The dividend growth
CAPM
Average of the...
Stock ABC has beta of 1.2. The risk-free rate is 5%, and the market expected rate...
Stock ABC has beta of 1.2. The risk-free rate is 5%, and the
market expected rate of return is 14%. My estimation shows that the
stock of ABC has alpha of 3% over a one-year period horizon. I have
$20,000 in my account and I also want to “buy on margin” to buy as
much ABC as possible. Initial margin requirement is 50% and I am
supposed to pay back 5% annually compounded interest on it. What is
the rate...
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