What is required rate of return of common stock

Assignment Help Financial Management

Reference no: EM131525642

1. You work for a firm with an issue of 40,000 bonds outstanding and 5,000,000 of market value in preferred stock that sells to yield 6%. What is the value of the preferred stock if it pays a $5 dividend?

2. The common stock has a market value of $50 per share with 100,000,000 shares outstanding. If the growth rate is 6% per annum and the earnings are $ 4 per share. What is the required rate of return of the common stock?

3. Assume the capital structure as in 1 and 2 above. What is the market rate if the bonds sell for $1075 per bond?

Please show all work.

Reference no: EM131525642

Questions Cloud

Arnings were paid as dividends and nothing were reinvested : By how much does its value exceed what it would be if all earnings were paid as dividends and nothing were reinvested?

Total annual returns for given period of time : Consider the following table for the total annual returns for a given period of time. What about 95 percent of the time?

Find the price of stock that is expected to pay dividend : Find the price of a stock that is expected to pay a dividend of $2 next year (period 1).

Market price of this stock based on its dividend : The return of stock of this risk class is 6%. What is the market price of this stock based on its dividend?

What is required rate of return of common stock : What is the required rate of return of the common stock? What is the market rate if the bonds sell for $1075 per bond?

What is the required rate of return of common stock : If the growth rate is 6% per annum and the earnings are $ 4 per share. What is the required rate of return of the common stock?

What is the bonds annual coupon rate : What is the bonds (nominal) annual coupon rate?

Property taxes of current property value : Selling costs would be 6.5% of the sale price and property taxes are 1.5% of current property value.

Prepare a balance sheet for the general fund : The following transactions relate to the General Fund of the City of Buffalo Falls for the year ended December 31, 2012.

User Account

All Pages