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Finance 33 Problems Assignment Solution with Workings

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Question;Question 11. ABC's last dividend was $2.7. The dividend growth rate is expected to be constant at 30% for 3 years, after which dividends are expected to grow at a rate of 5% forever. If the firm's required return (rs) is 11%, what is its current stock price (i.e. solve for Po)?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 pointsQuestion 21. ABC is expected to pay a dividend of $4.8 per share at the end of the year. The stock sells for $193 per share, and its required rate of return is 13.8%. The dividend is expected to grow at some constant rate, g, forever. What is the growth rate (i.e. solve for g)?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 31. ABC Company's last dividend was $0.4. The dividend growth rate is expected to be constant at 16% for 2 years, after which dividends are expected to grow at a rate of 6% forever. The firm's required return (rs) is 11%. What is its current stock price (i.e. solve for Po)?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 pointsQuestion 41. ABC?s last dividend paid was $0.4, its required return is 13.3%, its growth rate is 7%, and its growth rate is expected to be constant in the future. What is Sorenson's expected stock price in 7 years, i.e., what is P7?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 pointsQuestion 51. If D1 = $2.83, g (which is constant) = 2%, and P0 = $45.18, what is the stock?s expected dividend yield for the coming year?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 61. The common stock of Wetmore Industries is valued at $40.6 a share. The company increases their dividend by 7.8 percent annually and expects their next dividend to be $5.6. What is the required rate of return on this stock?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 71. ABC just paid a dividend of D0 = $4. Analysts expect the company's dividend to grow by 33% this year, by 28% in Year 2, and at a constant rate of 6% in Year 3 and thereafter. The required return on this stock is 17%. What is the best estimate of the stock?s current market value?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 pointsQuestion 81. ABC's stock has a required rate of return of 11.2%, and it sells for $55 per share. The dividend is expected to grow at a constant rate of 6.1% per year. What is the expected year-end dividend, D1?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 pointsQuestion 91. If D1 = $4.5, g (which is constant) = 6.4%, and P0 = $60.6, what is the stock?s expected total return for the coming year?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 101. ABC Enterprises' stock is currently selling for $64.5 per share. The dividend is projected to increase at a constant rate of 5.8% per year. The required rate of return on the stock is 12%. What is the stock's expected price 5 years from today (i.e. solve for P5)?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 pointsQuestion 111. A stock's next dividend is expected to be $1.5. The required rate of return on stock is 16.3%, and the expected constant growth rate is 5.6%. What is the stock's current price?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 pointsQuestion 121. A stock just paid a dividend of D0 = $1.2. The required rate of return is rs = 19.6%, and the constant growth rate is g = 7.4%. What is the current stock price?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 pointsQuestion 131. A stock is expected to pay a dividend of $1.6 at the end of the year. The required rate of return is rs = 16.5%, and the expected constant growth rate is g = 7%. What is the stock's current price?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 pointsQuestion 141. ABC Enterprises' stock is expected to pay a dividend of $1.9 per share. The dividend is projected to increase at a constant rate of 7.5% per year. The required rate of return on the stock is 19.3%. What is the stock's expected price 3 years from today (i.e. solve for P3)?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 pointsQuestion 151. ABC Inc., is expected to pay an annual dividend of $5.1 per share next year. The required return is 19.2 percent and the growth rate is 7 percent. What is the expected value of this stock five years from now?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 pointsQuestion 161. The common stock of Connor, Inc., is selling for $64 a share and has a dividend yield of 3 percent. What is the dividend amount?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 pointsQuestion 171. A stock just paid a dividend of $0.8. The required rate of return is 10.6%, and the constant growth rate is 6.2%. What is the current stock price?Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.1 pointsQuestion 181. If last dividend = $4.8, g = 4.9%, and P0 = $77.8, what is the stock?s expected total return for the coming year?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 191. The 8 percent annual coupon bonds of the ABC Co. are selling for $880.76. The bonds mature in 10 years. The bonds have a par value of $1,000 and payments are made semi-annually? What is the before-tax cost of debt?Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.1 pointsQuestion 201. ABC Industries will pay a dividend of $1 next year on their common stock. The company predicts that the dividend will increase by 5 percent each year indefinitely. What is the firm?s cost of equity if the stock is selling for $30 a share?Enter your answer in percentages rounded off to two decimal points. DO not enter % in the answer box.1 pointsQuestion 211. ABC Inc.'s perpetual preferred stock sells for $56 per share, and it pays an $9 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of $4 per share. What is the company's cost of preferred stock for use in calculating the WACC?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 221. ABC Industries will pay a dividend of $1 next year on their common stock. The company predicts that the dividend will increase by 5 percent each year indefinitely. What is the dividend yield if the stock is selling for $26 a share?Enter your answer in percentages rounded off to two decimal points. DO not enter % in the answer box.1 pointsQuestion 231. The ABC Company has a cost of equity of 21.2 percent, a pre-tax cost of debt of 5.2 percent, and a tax rate of 30 percent. What is the firm?s weighted average cost of capital if the proportion of debt is 65.6%?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 241. The 7 percent annual coupon bonds of the ABC Co. are selling for $950.41. The bonds mature in 8 years. The bonds have a par value of $1,000 and payments are made semi-annually. If the tax rate is 35%, what is the after-tax cost of debt?Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.1 pointsQuestion 251. If the market value of debt is $104,730, market value of preferred stock is $65,224, and market value of common equity is 233,950, what is the weight of common equity?Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.1 pointsQuestion 261. Several years ago, the ABC Company sold a $1,000 par value bond that now has 15 years to maturity and a 6.50% annual coupon that is paid semiannually. The bond currently sells for $980 and the company?s tax rate is 35%. What is the after-tax cost of debt?1 pointsQuestion 271. The 8.5 percent annual coupon bonds of the ABC Co. are selling for $1,179. The bonds mature in 12 years. The bonds have a par value of $1,000. If the tax rate is 30%, what is the after-tax cost of debt?Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.1 pointsQuestion 281. ABC, Inc., has 757 shares of common stock outstanding at a price of $62 a share. They also have 197 shares of preferred stock outstanding at a price of $69 a share. There are 276, 8 percent bonds outstanding that are priced at $50. The bonds mature in 16 years and pay interest semiannually. What is the capital structure weight of the preferred stock?Enter your answer as a percentage rounded off to two decimal points. Do not enter % in the answer box.1 pointsQuestion 291.The 8 percent annual coupon bonds of the ABC Co. are selling for $1,080.69. The bonds mature in 10 years. The bonds have a par value of $1,000. What is the before-tax cost of debt?Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.1 pointsQuestion 301. Several years ago, the ABC Company sold a $1,000 par value bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $925 and the company?s tax rate is 40%. What is the after-tax cost of debt?1 pointsQuestion 311. The before-tax cost of debt is 11.8 percent. What is the after-tax cost of debt if the tax rate is 49 percent?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.1 pointsQuestion 321. If the market value of debt is $159,434, market value of preferred stock is $88,315, and market value of common equity is 259,365, what is the weight of preferred stock?Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.1 pointsQuestion 331. You were hired as a consultant to ABC Company, whose target capital structure is 35% debt, 15% preferred, and 50% common equity. The before-tax cost of debt is 6.50%, the yield on the preferred is 6.00%, the cost of common stock is 11.25%, and the tax rate is 40%. What is the WACC?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

 

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