Solution-Explain what is the expected rate of return of the

Explain what is the expected rate of return of the stock

Assignment Help Accounting Basics

Reference no: EM131600989

Assignment

Calculate the following problems and provide an overall summary of how companies make financial decisions in no more than 700 words, based on your answers:

1. Stock Valuation: A stock has an initial price of $100 per share, paid a dividend of $2.00 per share during the year, and had an ending share price of $125. Compute the percentage total return, capital gains yield, and dividend yield.

2. Total Return: You bought a share of 4% preferred stock for $100 last year. The market price for your stock is now $120. What was your total return for last year?

3. CAPM: A stock has a beta of 1.20, the expected market rate of return is 12%, and a risk-free rate of 5 percent. What is the expected rate of return of the stock?

4. WACC: The Corporation has a targeted capital structure of 80% common stock and 20% debt. The cost of equity is 12% and the cost of debt is 7%. The tax rate is 30%. What is the company's weighted average cost of capital (WACC)?

5. Flotation Costs: Medina Corp. has a debt-equity ratio of .75. The company is considering a new plant that will cost $125 million to build. When the company issues new equity, it incurs a flotation cost of 10%. The flotation cost on new debt is 4%. What is the initial cost of the plant if the company raises all equity externally.

Reference no: EM131600989

Questions Cloud

Speculate the implications of simply ignoring the email : Explain how you would you go about communicating this email, and to whom you would report to. Speculate the implications of simply ignoring the email

Two depreciation methods are being considered : Two depreciation methods are being considered for new hospital surgery equipment.

Demanded design means unsold merchandise : Passing on a highly demanded design means unsold merchandise and missing out on profits that are $300,000 on average.

What bid price should you submit on the contract : Consider project to supply 117 million postage stamps per year to U.S. Postal Service for the next five years. what bid price should you submit on the contract?

Explain what is the expected rate of return of the stock : CAPM: A stock has a beta of 1.20, the expected market rate of return is 12% and a risk-free rate of 5 percent. What is the expected rate of return of the stock?

Describe the approach necessary to ensure that all evidence : Describe the approach necessary to ensure that all evidence is gathered properly and that the chain of custody has been maintained

Create the given positions based upon a job analysis : Manager in the marketing department: Mid-level position in a start-up company, in Scottsdale, AZ.

Prepare the journal entry to record the sale : Alpine Company issues $2 million, 10-year, 7% bonds at 99, with interest payable on December 31. Prepare the journal entry to record the sale of these bonds

Examine how cqi leaders can garner support : Examine how CQI leaders can garner support and buy-in from staff responsible for CQI activities.

User Account

All Pages

Explain what is the expected rate of return of the stock

Reference no: EM131600989

Reference no: EM131600989

Questions Cloud

Reviews

Write a Review

Accounting Basics Questions & Answers

How much control does fed have over this longer real rate

Coures:- fundamental accounting principles

Accounting problems

Theory of interest - term structure of interest rates

Write a report on internal controls

Prepare the bank reconciliation for company

Cost-benefit analysis

Theory of interest

Liquidity and profitability

What is the expected risk premium on the portfolio

Simple interest and compound interest

Capm and venture capital

Assured A++ Grade

Academics

Major Subjects

Majors

Get In Touch

TERMS & POLICIES

HELP & SUPPORT