Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

1) The Tribiani Company just issued a dividend of $2.90 per share on its common stock. The company is expected to maintain a constant 4.5

1) The Tribiani Company just issued a dividend of $2.90 per share on its common stock. The company is expected to maintain a constant 4.5 percent growth rate in its dividends indefinitely.

If the stock sells for $56 a share, what is the companys cost of equity? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

COST OF EQUITY____%

2) The Swanson Corporations common stock has a beta of 1.07. If the risk-free rate is 3.4 percent and the expected return on the market is 11 percent, what is the companys cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

cost of equity capital__%

3)

Suppose Wacken, Limited, just issued a dividend of $2.73 per share on its common stock. The company paid dividends of $2.31, $2.39, $2.48, and $2.58 per share in the last four years.

a.

If the stock currently sells for $43, what is your best estimate of the companys cost of equity capital using the arithmetic average growth rate in dividends? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

b. What if you use the geometric average growth rate? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Key Financial Market Concepts

Authors: Bob Steiner

2nd Edition

0273750127, 978-0273750123

More Books

Students also viewed these Finance questions

Question

13-4 What are alternative methods for building information systems?

Answered: 1 week ago

Question

13-1 How does building new systems produce organizational change?

Answered: 1 week ago