Determine the rate of return, Finance Basics

Assignment Help:

1. A stock pays no dividend and is expected to be sold for $50 after 4 years. If the investor's RRR is 12%, at what price is he/she willing to buy it?

2. ABC company has its ROE=10% and a retention rate at 30% of its net income for reinvestment purpose. It recently paid a dividend of $2. The stock is currently selling for $50. What is the expected rate of return for the stock? If your RRR is 12%, will you be willing to buy it? If your RRR is 15%, will you be willing to buy?

3. A common stock sells for $50 and will pay a dividend of $3.5 next period. The firm has a constant growth rate of 15%. What is the expected rate of return? If your RRR is 20%, will you buy it?

4. You're planning to buy between preferred Stock A and B. Stock A pays an annual dividend of $6 and is currently selling for $60. Stock B pays an annual dividend of $8 and is selling for $75. Which one will you buy?

 

 


Related Discussions:- Determine the rate of return

What are the functions of stock exchange, What are the Functions of Stock E...

What are the Functions of Stock Exchange Main functions performed b stock exchange are as follows: (1) Providing Liquidity and Marketability to existing securities: Sto

State the classification of new issue market, State the Classification of N...

State the Classification of New Issue Market New market can be categorized as: (i) A market where firms go to the public for the first time through initial public offerin

Cash management techniques, Cash Management Techniques The basic strat...

Cash Management Techniques The basic strategies that must be employed via the business firm in managing its cash are as: i) To pay account payables as behind as possible wi

Explain about the functions of financial systems, Explain about the functio...

Explain about the functions of financial systems. Financial systems perform the necessary economic function of channelling funds through units who have stored surplus funds to

Acceptance rule of payback period or pbp, Acceptance Rule of Payback Period...

Acceptance Rule of Payback Period or PBP By using PBP method a company such will accept all those ventures whose payback period is less than to set via the management and will

Finance, If you inherited $ 45,000 today and invested all of it in a securi...

If you inherited $ 45,000 today and invested all of it in a security that paid a 7 percent rate of return, how much would you have in 25 years?

Explain about the internal rate of return, Explain about the Internal Rate ...

Explain about the Internal Rate of Return Internal rate of return (IRR) is the rate of discount that makes the present value of all the revenues (cash flows) from the invest

Islamic banking, what is the exact nature of IDB sukuk

what is the exact nature of IDB sukuk

Management of sole proprietorship, Management of Sole Proprietorship  I...

Management of Sole Proprietorship  In sole proprietorship the owner is usually in charge of day to day running of the business. If the business is large he may give some duties

Write Your Message!

Captcha
Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd