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##### Finance 33 Problems Assignment

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Question;Question 1;1. 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 points;Question 2;1. 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 points;Question 3;1. 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 points;Question 4;1. 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 points;Question 5;1. 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 points;Question 6;1. 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 points;Question 7;1. 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 points;Question 8;1. 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 points;Question 9;1. 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 points;Question 10;1. 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 points;Question 11;1. 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 points;Question 12;1. 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 points;Question 13;1. 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 points;Question 14;1. 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 points;Question 15;1. 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 points;Question 16;1. 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 points;Question 17;1. 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 points;Question 18;1. 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 points;Question 19;1. 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 points;Question 20;1. 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 points;Question 21;1. 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 points;Question 22;1. 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 points;Question 23;1. 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 points;Question 24;1. 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 points;Question 25;1. 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 points;Question 26;1. 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 points;Question 27;1. 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 points;Question 28;1. 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 points;Question 29;1.;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 points;Question 30;1. 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 points;Question 31;1. 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 points;Question 32;1. 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 points;Question 33;1. 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.

Paper#48920 | Written in 18-Jul-2015

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