Find what is the required rate of return of the stock

Assignment Help Finance Basics

Reference no: EM132052465

Question: Problem 1: CAPM:

If the risk-free rate is 0.0200, the return of the market is 0.1350, and the beta is 0.90, what is the required rate of return of the stock using the CAPM equation? Please note that the return of the market is not the same as the market risk premium.

Problem 2: Growth Rate: (Equation 9.11, page 373):

If the retention ratio is ((Net Income - Dividends)/Net Income), and the net income amount is $5.07 Billion, the dividends totaled $3.92 Billion, and total equity is $3.014 Billion, what is the retention ratio? What is the return on equity? What is the growth rate for the firm?

Problem 3: DCF:

If the dividend paid last year, D0 (not D^1), was $2.00, and the price per share was $49.27, utilizing the growth rate previously calculated, what is the required rate of return on stock utilizing the discounted cash-flow approach?

Problem 4: WACC Calculations:

If the long-term debt for the firm is $13.693 Billion, the total equity for the firm is $3.014 Billion, the cost of debt is 0.0570, the tax rate is 0.35, there is no preferred equity, what is the WACC utilizing the CAPM rs and then utilizing the DCF rs?

Note that "TWO" separate WACC equations need to be calculated in MS Excel.

Reference no: EM132052465

Questions Cloud

Characteristics of sedimentary grains : What sedimentary rocks can tell us about past environments looking at the characteristics of sedimentary grains?

Discuss nursing interventions for each of the disorder : Discuss three Nursing Interventions for each of the disorder. Identify how you would evaluate the effectiveness of nursing care. Explain why

What amount should be reported on tulip income statement : What amount should be reported on Tulip's income statement for the year ended December 31, 2007 under the caption "discontinued operations"

Prevent property damage in the event of a hurricane : What are some ways to prevent property damage in the event of a hurricane. Describe 2 actions that should be included in the plan

Find what is the required rate of return of the stock : If the risk-free rate is 0.0200, the return of the market is 0.1350, and the beta is 0.90, what is the required rate of return of the stock using the CAPM.

Prevent property damage in the event of a hurricane : What are some ways to prevent property damage in the event of a hurricane. Describe 2 actions that should be included in the plan

Calculate its book value at the end of year : A machine that cost $770,000 has an estimated residual value of $70,000, Calculate its book value at the end of year 6

What type of shoreline materials are most resistant : What type of shoreline materials are most resistant to erosion? Which are least resistant to erosion? Why?

What is the expected growth rate : If investors require a 9% return, what is the expected growth rate? Round your answer to two decimal places. Do not round your intermediate calculations.

User Account

All Pages