What is the value of the firm when using the constant growth

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Reference no: EM133433372

1-SMG common stock sells for $180. The stock has a required return of 12%. The company will pay an annual dividend of $1.80 next year. What is the rate of growth of its dividend?

2-TNG just paid its first dividend of $1.00. The predicted dividend growth rate over the next two years will be 3% before adjusting up to a faster rate of 4% indefinitely. What is this stock worth to you per share if you demand an 8% rate of return?

3-Baskin Cab Company will have cash flow to the firm of $35 million for the next year. Cash flow will grow continuously at 5% forever. The firm has $100 million in debt and 50 million shares outstanding. Using a constant growth firm valuation model, if the rate of return (WACC) is 10%, what is the value of the firm when using the constant growth model?

4-Baskin Cab Company will have cash flow to the firm of $35 million for the next year. Cash flow will grow continuously at 5% forever. The firm has $100 million in debt and 50 million shares outstanding. Using a constant growth firm valuation model, if the rate of return (WACC) is 10%, what is the value of the stock?

5- A year ago, you purchased shares of STZ stock at a price of $160.63 a share. The company made four payment of four quarterly dividends of $0.75 a share during the year. Today, you sold all of your shares for $229.90 a share. What is your total percentage return on this investment?

6-Sia has a portfolio that has 20% of its funds invested in Security A, 75% of its funds invested in Security B, and 5% invested in the risk-free asset. The risk-free asset earns 5%. Security A has an expected return of 8% and a standard deviation of 18%. Security B has an expected return of 10% and a standard deviation of 22%. Securities A and B have a coefficient of correlation of 0.60. What is the expected return of the portfolio?

7-JACK common stock has a beta of 0.95. The U.S. Treasury bill (rf) is yielding 1.5% and the expected market risk premium is 10%. JACK's tax rate is 35%. What is JACK's cost of equity capital?

8-JACK has 100,000 bonds outstanding that pay $25 every six months. The bonds are currently selling for $880 and mature in 5 years. The U.S. Treasury bill (rf) is yielding 2% and the expected market return is 12%. JACK 's tax rate is 21%. What is JACK's cost of debt capital (rd = YTM)?

9-VW Rabbit, Inc. has debt with both a face and a market value of $6,000. This debt has a coupon rate of 7% and pays interest annually. The expected earnings before interest and taxes is $1,500, the tax rate is 21%, and the unlevered cost of capital is 12%. What is the value of the levered firm?

10-Given that The Hellenic Food Co. has a policy of risk adjusting their WACC of 12% by plus or minus 3% for above and below average risk projects respectively, what is the NPV for independent project B?

Reference no: EM133433372

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