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Assume that Coca-Cola Company has a share price today of $43.81. The firm will pay a dividend of $1.38 in one year, and you expect Coca-Cola to raise this dividend by approximately 6.4% per year in perpetuity.
a. If Coca-Cola's equity cost of capital is 8.4% what share price would you expect based on your estimate of the dividend growth rate? Coca-Cola's price per share should be $ (Round to the nearest cent)
b. Given Coca-Cola's share price, what would you conclude about your assessment of Coca-Cola's future dividend growth? Given Coca-Cola's share price today, its dividend growth rate should be %. (Round to two decimal places.)
Assume that you contribute $180 per month to a retirement plan for 15 years. What is the value of your retirement plan after the 40 years?
Williamson, Inc., has a debt–equity ratio of 2.45. The company's weighted average cost of capital is 10 percent, and its pretax cost of debt is 6 percent. The corporate tax rate is 35 percent. What is the company's cost of equity capital? What is the..
calculate the yield to maturity of the bond (assume annual interest payments).
The book value of the debt issue is $70 million. In addition, the company has a second debt issue on the market, a zero coupon bond with 12 years left to maturity; the book value of this issue is $100 million and the bonds sell for 61 percent of par...
In which of the following scenarios may a loan be taken from a Traditional IRA?
A company needs a certain type of machine for the next 5 years. They presently own such a machine, which is now worth $6,000 but will lose $2,000 in value in each of the next 3 years, after which it will be worthless and unusable.
Holtzman Clothiers’s stock currently sells for $38.00 a share. It just paid a dividend of $2.00 a share (i.e., D(0) = $2.00). The dividend is expected to grow at a constant rate of 5% a year. What stock price is expected 1 year from now? What is requ..
what is the percentage change in the bond's price as predicted by the duration formula?
At the beginning of last year Thomas purchased 100 shares of the Web.com Fund at an NAV of ?$ 15.07 and automatically reinvested all distributions. As a result of? reinvesting, Thomas ended the year with 116 shares of the fund with an NAV of $17.79. ..
The average turnover rate was 23% percent per year. The cost to recruit and train one new employee was $56,625. To address the turnover problem, the company developed a skills training program that averaged 80 hours per year per employee. What is the..
Assume that today's date is February 15, 2015. Robin Hood Inc. bond is an annual-coupon bond.
How much more is a perpetuity of $100,000 worth than an annuity of the same amount for 50 years? Assume a 10% discount rate and cash flows at the end of period.
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