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1. Terminal Emulator Co. pays a constant $10.79 dividend on its stock. The company will maintain this dividend for the next 11 years and will then cease paying dividends forever. If the required return on this stock is 12.5 percent, what is the current share price?
2. Screenshot, Inc., just paid a dividend of $2.27 per share on its stock. The dividends are expected to grow at a constant rate of 5.9 percent per year, indefinitely. Assume investors require an 8 percent return on this stock. What is the expected price of this stock in 8 years?
3. The stock price of Tomboy, Inc. is $58.78. Investors require a 8.6 percent rate of return on similar stocks. If the company plans to pay a dividend of $3.14 next year, what growth rate is expected for the company’s stock price?
Enter rate in percents, to three decimal places.
Suppose Mr. Thomas, president of your company, has hired you to determine the firm's cost of debt and the cost of equity capital. Based on the most recent financial statements, the company's total liabilities are $8 millions. Total interest expense f..
Counts accounting has a beta of 1.50. The tax rate is 40%, and Counts is financed with 30% debt. What is Counts' unlevered beta?
Hastings Corporation is interested in acquiring Vandell Corporation. Vandell has 1 million shares outstanding and a target capital structure consisting of 30% debt. Vandell's debt interest rate is 7.3%. What is the value of its tax shields? What is ..
Consider Twitter's current stock price: $108.89. Current earnings per share, EPS = $1.29. If next year’s earnings are expected to be $3.14, what is the forward P/E ratio of the stock? Assume that Twitter is expected to pay no dividends for the next 5..
Which of the following is true of risk aversion?
A depository institution holds $190 million in required reserves and $24 million in excess reserves. Its remaining assets include $576 million in loans and $310 million in securities. Equity is $100 million. If the institution’s only liabilities ar..
Discuss how larger economic issues affect the CP market and a company's issuance of CP. 1 and half pages plus appropriate APA citation.
Aerotech, an aerospace technology research firm, announced this morning that its hired the world's most knowledgeable and prolific space researchers. Before today, Aerotech's stock had been selling for $100. What do you expect will happen to Aerotech..
Kyle Corporation is comparing two different capital structures, an all-equity plan (Plan I) and a levered plan (Plan II). Under Plan I, Kyle would have 715,000 shares of stock outstanding. Assume that EBIT is $1.6 million. Compute the EPS for both Pl..
A 5 year girl was given a lottery ticket for her recent birthday. The ticket was the grand prize winner and is suppose to pay $80,000 per year after taxes, for 20 years. The state sued, however, and won the case arguing that it would pay the prize as..
FARO Technologies, whose products include portable 3D measurement equipment, recently had 17 million shares outstanding trading at $42 a share. Suppose the company announces its intention to raise $200 million by sell new shares. What do market signa..
Identify what the sources of costs might be. Actual costings are not part of this exercise. Always be on the lookout for the hidden costs that can turn an apparent saving into an actual loss.
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