Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

A stock is selling today for $45 per share. At the end of the year, it pays a dividend of $3 per share and sells

image text in transcribedimage text in transcribedimage text in transcribed
  • A stock is selling today for $45 per share. At the end of the year, it pays a dividend of $3 per share and sells for $51.

image text in transcribedimage text in transcribedimage text in transcribed
"You are a consultant to a firm evaluating an expansion of its current business . The annual cash flow forecasts | in millions of dollars ; for the project are* Years Annual Cash Flow - 100 1 - 10 15 Based on the behaviour of the firm's stock , You believe that the beta of the firm is 1 . 4. Assuming that the rate of return available on risk - free investments is $%/ and that the expected rate of return on the market portfolio is 12%/ , what is the net present value of the project ? ( Round your answer to 2 decimal places . \ MPV millionThe common stock of Leaning Tower of Pita, Inc., a restaurant chain , will generate the following payoffs to investors next year ! Probability Dividend Stock Price Boom 0. 35 $ 195 Normal economy 0. 45 $ 137 Recession 0. 2 $ 3 The company goes out of business if a recession hits . Calculate the expected rate of return and standard deviation of return to Leaning Tower of Pita share -holders . The stock is selling today for $95. ( Round your answers to 2 decimal places . ! Expected rate of return Standard deviationA stock is selling today for $ 45 per share . At the end of the year , it pays a dividend of $3 per share and sells for $ 51 . What is the total rate of return on the stock ? ( Round your answer to 2 decimal places . !" Total rate of return What is the dividend yield ? ( Round your answer to 2 decimal places . ! Dividend yield What is capital gains yield ? ( Round your answer to 2 decimal places ." Capital gains yield

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

Financial Management Core Concepts

Authors: Raymond M Brooks

3rd edition

133866696, 978-0133866698

More Books

Students also viewed these Finance questions