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Stock in Country Road Industries has a beta of 0.85. The market risk premium is 8.5 percent, and T-bills are currently yielding 4.5 percent. The company's most recent dividend was $1.8 per share, and dividends are expected to grow at a 5.5 percent annual rate indefinitely. If the stock sells for $40 per share, what is your best estimate of the company's cost of equity? (Do not round your intermediate calculations.)
a) 10.25%
b) 10.99%
c) 7.9%
d) 9.27%
e) 11.73%
GoFit Training Inc just paid an annual year-end dividend of $1.60 per share. It plans to increase the dividend by 7% next year, and increase it by the same percentage for the future. If the required rate of return on the stock is 8%, what is the valu..
Fama’s Llamas has a weighted average cost of capital of 10.1 percent. The company’s cost of equity is 13 percent, and its pretax cost of debt is 8.1 percent. The tax rate is 40 percent. What is the company’s target debt−equity ratio?
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The balance sheet for Ferguson Corp. is shown here in market value terms. There are 9,000 shares of stock outstanding. How many shares will be outstanding after the repurchase? Shares outstanding What will the price per share be after the repurchase?
Assume you are a strategic consultant for Publix Supermarkets. Create a draft statement of your preliminary findings to the board of directors that summarizes your long-term strategic action, if any. You will have the opportunity to change this strat..
Using the Liquidity Premium Theory of Term Structure, what should be the current 2-year interest rate? What about the current 3-year interest rate?
Abercrombie & Fitch's common stock pays a dividend of $0.70. It is currently selling for $34.14. If the firm's investors require a return of 10 percent on their investment from buying Abercrombie & Fitch stock, what growth would Abercrombie & Fitch h..
Primal Grains Bakery Ltd. has only two divisions: Gluten and Gluten-Free. You have the following information about the asset value and beta of each division. The risk free interest rate is 3% and the required return on the market portfolio is 12%. Th..
What is their Price Earnings Ratio? What is their Sustainable Growth Rate?
You own a portfolio that has $2,000 invested in Stock A and $3,500 invested in Stock B. The expected returns on these stocks are 14 percent and 9 percent, respectively. What is the expected return on the portfolio?
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