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Constant growth
You are considering an investment in Justus Corporation's stock, which is expected to pay a dividend of $1.50 a share at the end of the year (D1 = $1.50) and has a beta of 0.9. The risk-free rate is 4.5%, and the market risk premium is 4.0%. Justus currently sells for $33.00 a share, and its dividend is expected to grow at some constant rate, g. Assuming the market is in equilibrium, what does the market believe will be the stock price at the end of 3 years? (That is, what is ?) Round your answer to two decimal places. Do not round your intermediate calculations.
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A bond investor is considering two 10 year maturity bonds both rated AAA: the municipal bond is yielding 1.79% and the corporate bond is yielding 2.84%. At what marginal tax rate would the bond investor be indifferent between the two bonds?
Zero coupon bonds: Ten-year zero coupon bonds issued by the U.S. Treasury have a face value of $1,000 and interested is compounded semiannually.
What is the required return for Dentrix Corporation? The risk-free rate is 2.7%, the risk premium is 7.7, the expected rate of inflation is 3.4% and the company can currently issue bonds at a YTM of 4.9%. The company's beta is estimated to be 0.9. Ro..
The short-term nominal interest rate is 5%, with an expected inflation of 2%. Economists forecast that next year's nominal rate will increase by 100 basis point, but inflation will fall to 1.5%. What is the expected change in real interest rates?
By how much does Bradford's required return exceed Farley's required return?
What is present value of perpetual stream of cash flows that pays ?$7,500 at end of year one and annual cash flows grow at rate of 3?% per year? indefinitely.
Which of the following items is not an allowable deduction from the gross estate?
Suppose a firm estimates its WACC to be 10%. Should the WACC be used to evaluate all of its potential projects, even if they vary in risk? If not, what might be "reasonable" costs of capital for average-, high-, and low-risk projects?
A stock is expected to have a dividend per share of $0.60 at the end of the year. (D1=0.60). The growth rate for dividend is expected to be zero percent, if the stock has a required return rate of 12 percent. What is the expected price of the stock f..
Yan Yan Corp. has a $2,000 par value bond outstanding with a coupon rate of 4.9 percent paid semiannually and 13 years to maturity.- What is the price of the bond?
While checking the Wall Street Journal bond listings you notice that the price of an AT&T bond is the same as the price of a K-Mart bond. Based on this information you know that
In one year, promised yields to maturity have risen to 5.00%. What is your holding-period return?
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