Capital Structure Debt: Preferred Stock: Equity: DEBT: Preferred Stock Sales Price (par value): Dividend: Common Stock Sales Price: 45% 45% 10% 15% $ 150 $ 50 $ 80
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- A stock is selling today for $40 per share. At the end of the year, it pays a dividend of $2 per share and sells for $44. Required: a. What is the total rate of return on the stock? b. What are the dividend yield and percentage capital gain? c. Now suppose the year-end stock price after the dividend is paid is $36. What are the dividend yield and percentage capital.gain in this case? Complete this question by entering your answers in the tabs below. ces Required A Required B Required C What is the total rate of return on the stock? (Enter your answer as a whole percent.) Rate of return % Reguired A Required B > a ere to searchParticulars 1. Discount rate АВС XYZ 18.5% 14.25% Not 2. Historical growth rate 2.2218% available 3. Sustainable growth 4.5% 20% rate 4. Fundamental value of stock using dividend growth model through historical growth rate 5. Fundamental value of stock using dividend growth model through sustainable growth rate 6. Fundamental value of stock using residual income growth model through historical growth rate 7. Fundamental value of stock using residual income growth model through sustainable growth rate Not Tavailable 3395 Not available 3953 Not 427.30 available 420.35 1 96.5Given the following information: Percent of capital structure: Debt Preferred stock Common equity (retained earnings) Additional information: Bond coupon rate Bond yield to maturity Dividend, expected common Dividend, preferred Price, common Price, preferred Flotation cost, preferred Growth rate Corporate tax rate 13% 11% Debt Preferred stock Common equity (retained earnings) Weighted average cost of capital $ 7.00 $ 14.00 $ 70.00 $110.00 $ 2.50 30% 10% 5 85 Calculate the Hamilton Corp's weighted cost of each source of capital and the weighted average cost of capital. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Weighted Cost %
- Stock Expected Dividend Expected Capital Gain A $0 $10 B $5 $5 C $10 $0 A.) If each stock is priced at $175, what are the expected net precentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%), and (iii) an individual with an effective tax rate of 10% on dividends and 5% on capital gains? B.) Suppose that investors pay 40% tax on dividends and 10% tax on capital gains. If stocks are priced to yield an after-tax return of 10%, what would A,B, and C each sell for? Assume the expected dividend is a level perpetuity.Apply dividend growth model to calculate cost of equity: Current market price $ 100 Dividend $ 6 Dividend growth 4%Stock Expected Dividend Expected Capital Gain A $0 $10 B $5 $5 C $10 $0 A.)If each stock is priced at $175, what are the expected netpercentage returns on each stock to (i) a pension fund that does not pay taxes, (ii) a corporation paying tax at 21% (the effective tax rate on dividends received by corporations is 6.3%) and (iii) an individual with an effective tax rate of 10% on dividends and 5% on capital gains? B.) Suppose that investors pay 40% on tax dividends and 10% tax on capital gains. If stocks are priced to yield an after-tax return of 10%, what would A,B and C each sdell for? Assume the expected dividend is a level perpetuity. (Please answer B)
- Calculate the covariance between the following assets [6] State of the world Probability (Pi) Return for stock A Return for Stock B Expansion 0.25 32% 5% Normal 0.50 14% 15% Recession 0.25 4% 25%Cost of equity Cost of Debt Method 1 25.11% (According to dividend growth model) 2.31% Method 2 3.11% (According to CAPM model approach) 4.57% a. If you have to select one of the methods from above, which one would you choose and why? b. If you would be prospective investor, would you invest in Almarai Co. shares or bonds? Specify the reason.Global Technology's capital structure is as follows: Debt Preferred stock Common equity 15% 50 35 The aftertax cost of debt is 8.50 percent; the cost of preferred stock is 12.00 percent; and the cost of common equity (in the form of retained earnings) is 15.50 percent. Calculate the Global Technology's weighted cost of each source of capital and the weighted average cost of capital. Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places. Debt Preferred stock Common equity Weighted average cost of capital Weighted Cost % %
- Percent of capital structure: Preferred stock Common equity (retained earnings) Debt Additional information: Corporate tax rate Dividend, preferred Dividend, expected common Price, preferred Growth rate Bond yield Flotation cost, preferred Price, common 15% 45 40 35% Debt Preferred stock Common equity (retained earnings) Weighted average cost of capital $ 8.00 $ 3.50 $ 105.00 98 8% $ 10.40 $ 78.00 Calculate the weighted average cost of capital for Digital Processing Incorporated Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places. Answer is complete but not entirely correct. Weighted Cost 5.20 % 8.33 11.50 25.03 %The following information is available in respect of a firm: Capitalization Rate : 10% Earnings per Share : Rs. 50 Assume rate of return on investments : ja. 12% b. 8% c. 10% Show the effect of dividend policy on market price of shares applying Walter's formula when dividend pay-out ratio is : a. 0% b. 20% c. 40% d. 80% e. 100%Given the following information: Percent of capital structure: Debt Preferred stock Common equity (retained earnings) Additional information: Bond coupon rate Bond yield to maturity Dividend, expected common Dividend, preferred Price, common Price, preferred Flotation cost, preferred Growth rate Corporate tax rate 40% 20 40 12% 10% $ 6.00 $ 13.00 $ 65.00 $ 122,00 $ 4.00 9% 30% Calculate the Hamilton Corporation's weighted cost of each source of capital and the weighted average cost of capital. Note: Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.
