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Return on Common Stock
You buy a share of The Ludwig Corporation stock for $23.30. You expect it to pay dividends of $1.09, $1.15, and $1.2133 in Years 1, 2, and 3, respectively, and you expect to sell it at a price of $28.95 at the end of 3 years.
A) Calculate the growth rate in dividends. Round your answer to two decimal places.
B) Calculate the expected dividend yield. Round your answer to two decimal places.
C) Assuming that the calculated growth rate is expected to continue, you can add the dividend yield to the expected growth rate to obtain the expected total rate of return. What is this stock's expected total rate of return? Round your answer to two decimal places.
What is the required rate of return if the market risk premium increased to 20% because of the increase in investors' risk aversion assuming that the return on the risk-free asset remains the same as in question 2 above.
A share of stock is currently selling for $31.80. If the anticipated constant growth rate for dividends is 6% and investors are seeking a 16% return, what is the dividend just paid?
(Defining Capital Structure Weights) In August of 2009 the capital of the Emerson Electric Corporation (EMR) (measured in book and market values) appeared as follows:
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1. When is debt good to have on your balance sheet? How does debt influence your cash flow? How can we best measure the effects of debt and analyze if an organization has "too much" debt?
A Treasury bill has a bid yield of 3.58% and an ask yield of 3.52%. The bill matures in 100 days. Assume a face value of $1,000. What is the dollar spread for this bill?
writing a business plan to create financials as part of the business plan.section 1 start-up expenses and
Bias (or systematic error) is a common concern in producing accurate research results. What can the researcher to do to solve this problem? A: Interpret results along with bias B: strive to minimize or eliminate bias C: Ignore the Bias D: Pursue samp..
What is the future value of $1,400, placed in a saving account for four years if the account pays 0.10, compounded quarterly?
McCall Manufacturing has a WACC of 10%. The firm is considering two normal, equally risky, mutually exclusive, but not repeatable projects. The two projects have the same investment costs, but Project A has an IRR of 15%, while Project B has an IRR o..
Endicott Enterprises Inc. has issued 30-year semiannual coupon bonds with a face value of $1,000. If the annual coupon rate is 14% and the current yield to maturity is 15%, what is the firm's current price per bond?
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