Using the one-period valuation model, assuming a year-end dividend of $11.00, an expected sales price of $110, and a required rate of return of 10%, the current price of the stock would be $___
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Using the one-period valuation model, assuming a year-end dividend of $11.00, an expected sales
Present value: It is the value of the sum of money in the present time.
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- The Franko Company has a beta of 1.20 By what percent will the rate of return on the stock of Franko Company increase if the market rate of return rises by 3%?An analyst gathered the following information regarding Beta Corporation: Current dividend per share = $2.18 Next year's expected dividend growth rate of 30% is expected to decline linearly over the following 8 years to a long-term constant growth rate of 6%. Řequired rate of return on the company's stock is 11%. The value of the company's stock today is closest to: 1. 41.86 2.98.54 3.88.07A preferred stock pays an annual dividend of $1.25. What is one share of this stock worth today if the rate of return is 13.5 percent? Show your work
- Wu of Troy, New York, has $5,000 that he wants to invest in the stock market. Ji is in college on a scholarship and does not plan to use the $5,000 or any dividend income for another five years, when he plans to buy a home. He is currently considering a small company stock selling for $25 per share with an EPS of $1.25. Last year, the company earned $900,000, of which $250,000 was paid out in dividends. What classification of common stock would you recommend to Ji? Calculate the P/E ratio and the dividend payout ratio for this stock. Round your answers to the nearest whole number c3.Given this information and your recommendation, would this stock be an appropriate purchase for Ji? Why or why not?Allen Bagley bought 300 shares of stock at $98.45 per share, using an initial margin of 55%. Given a maintenance margin of 26%, how far does the stock have to drop before Allen faces a margin call? (Assume that there are no other securities in the margin account.)If the dividend paid last year was $3.50, at a constant growth rate of 5%, and investors demand a 20% rate of return, what is the value of the common stock of ABD Company?
- ASAPA firm is evaluating an investment proposal which has an initial investment of $8,000 and discounted cash flows valued at $6,000 The net present value of the investment is?Which of the following statements about the current value of a short European call option on Warwick plc stock, a non-dividend-paying stock, is/are true? (a) The current value of a short European call option is less than or equal to zero. (b) The current value of a short European call option decreases as the volatility of returns on Warwick plc stock increases, holding all else constant. (c) The current value of a short European call option decreases as the price of Warwick plc stock increases, holding all else constant.
- You run a display ad campaign for a product that your firm markets. The campaign generates 28 million impressions, with a click rate of 0.038% and a conversion rate of 1.74%. The margin of each unit of product sold is $383, and consumers typically buy only one unit of the product at a time. The website sells impressions at a cost of $2 per thousand impressions (CPM). What is the return on investment for your firm? Group of answer choices 14.8% 26.6% 79.0% 127% 149.2%Consider company ABC. Today it is 1st of January 2023 and ABC has just paid a dividend of £3 million. The expected earnings of ABC for the next 30 years are forecast to grow at a rate of 15% per annum. From 1st of January 2053 and onwards the earnings of ABC are expected to grow at a rate of 5%. The required rate of return of ABC is 12% per annum. The current dividend policy of ABC is such that they pay out 50% of its earnings as dividends (assume that they pay their dividends on 1st of January every year). a) Suppose that the dividend payout ratio is expected to stay constant in the future. What is the value of ABC stock? Show and explain your calculations and any assumptions you make. b) Just after the dividend payment on 1st of January 2043, ABC is planning to reduce their dividends and only pay out 40% of its earnings. What is the value of ABC under the new dividend policy? c) Provide a recommendation to the management of ABC as to whether they should increase/cut back on…Richmond Industries issued 1.5 million new shares of equity to raise $50 million to finance a new investment. The equity just started trading on the stock market and investors have learned that Richmond expects to earn free cash flows of $11 million each year in perpetuity. Richmond has 5 million shares outstanding, and no other assets or opportunities. Suppose the appropriate discount rate for Richmond's future free cash flows is 6%, and the only capital market imperfections are corporate taxes and financial distress costs.