What is an estimate of ghi company cost of equity

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Q1. Consider a stock that that is expected to pay a dividend of $2.73 a year from now. The dividend is expected to grow at a constant rate of 2.7% per year. The current price of the stock is $40.21. What rate of return are investors expecting? Enter your answer as a percentage. Do not include the percentage sign in your answer.

Q2. A company has issued preferred stock with an annual dividend of $3.34 that will be paid in perpetuity. The current price of the stock is $48.03. What is the expected rate of return on the preferred stock? Enter your answer as a percentage. Do not include the percentage sign in your answer.

Q3. What is the price of a bond with a coupon rate of 3%, payable annually, a face value of $1000, 8 years to maturity, and a yield to maturity of 4%?

Q4. Consider a firm that has a debt-equity ratio of 1/4. The rate of return for debt is 7% and the rate of return for equity is 13%. The corporate tax rate is 31%. What is the weighted average cost of capital? Enter your answer as a percentage and rounded to 2 DECIMAL PLACES. Do not include the percentage sign in your answer.

Q5. GHI Company's current share price is $18.7 and it is expected to pay a $1.85 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 3.1% per year. What is an estimate of GHI Company's cost of equity?

Reference no: EM133028147

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