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1. The risk-free rate of return, rRF , is 11%; the required rate of return on the market, rM, 16%; and Schuler Company's stock has a beta coefficient of 1.6.a. If the dividend expected during the coming year, D1, is $3.00, and if g is a constant 2.75%, then at what price should Schuler's stock sell? Round your answer to the nearest cent.b. Now, suppose the Federal Reserve Board increases the money supply, causing a fall in the risk-free rate to 4% and rM to 12%. How would this affect the price of the stock? Round your answer to the nearest cent.c. In addition to the change in part b, suppose investors' risk aversion declines; this fact, combined with the decline in rRF, causes rM to fall to 10%. At what price would Schuler's stock sell? Round your answer to the nearest cent.d. Suppose Schuler has a change in management. The new group institutes policies that increase the expected constant growth rate to 7%. Also, the new management stabilizes sales and profits, and thus causes the beta coefficient to decline from 1.6 to 0.6. Assume that rRF and rM are equal to the values in part c. After all these changes, what is Schuler's new equilibrium price? (Note: D1 goes to $3.12.) Round your answer to the nearest cent.2. Investors require a 15% rate of return on Brooks Sisters' stock (rs = 15%).What would the value of Brooks's stock be if the previous dividend was D0 = $3 and if investors expect dividends to grow at a constant compound annual rate of (1) - 6%, (2) 0%, (3) 2%, or (4) 14%? Round your answers to the nearest cent.
Salt and Pepper incurred $14.9 million in depreciation expense and paid $25.5 million in taxes on EBIT in 2012. Calculate Salt and Pepper's 2011 EBIT.
You charged $2400 on your credit card for holiday gifts. Your credit card company charges you 8% annual interest
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The utility fund has a beta of 0.5 and the technology fund has a beta of 1.3. If the portfolios beta equal 1.10, how much of Karens portfolio is invested in the technology fund?
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The after-tax profit margin is forecasted to be 5%, and the forecasted payout ratio is 65%. What would be the additional funds needed? Do not round intermediate calculations. Round your answer to the nearest dollar.
What is the annual percentage rate on a loan with a stated rate of 2.75 percent per quarter?
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print it green inc. is a manufacturer of recycled printing supplies. the company began operations on 1012008 and is
You have founded three investment choices for a one-year deposit: 9.3%APR compounded monthly, 9.3% APR compounded annualy, and 8.5% APR compounded daily. Compute the EAR for each investment choice. (Assume that there are 365 days in the year)
What is the maximum lump sum payment you are willing to make today to buy these six future annual shipments?
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