Financial Assets 3 What is the stock's expected value 1 year from now? 4 What are the expected dividend yield, capital gains yield, and total return during the first year? e. Now assume that the stock is currently selling at $40.00. What is its expected rate of return? f. What would the stock price be if its dividends were expected to have zero growth? g. Now assume that Bon Temps's dividend is expected to grow 30% the first year, 20% the second year. h. Suppose Bon Temps is expected to experience zero growth during the first 3 years and then resume its i Finally, assume that Bon Temps's earnings and dividends are expected to decline at a constant rate of j. Suppose Bon Temps embarked on an aggressive expansion that requires additional capital. 10% the third year, and return to its long-run constant growth rate of 4%, what is the stock's value under these conditions? What are its expected dividend and capital gains yields in Year 1? Year 4? steady-state growth of 4% in the fourth year. What would be its value then? what would be its expected dividend and capital gains yields in Year 1? In Year 4? 4% per year, that is, g -4%. Why would anyone be willing to buy such a stock, and at what price should it sell? What would be its dividend and capital gains yields in each year? Management decided to finance the expansion by borrowing $40 million and by halting dividend payments to increase retained eamings. Its WACC is now 7%, and the projected free cash flows for the next three years are -$5 million, $10 million, and $20 million. After Year 3, free cash flow is projected to grow at a constant 5% what is Bon Temps's total value? If it has 10 million shares of stock and $40 million of debt and preferred stock combined, what is the price per share? k Suppose Bon Temps decided to issue preferred stock that would pay an annual dividend of $5.00 and that the issue price was $100.00 per share. What would be the stock's expected return? V expected rate of return be the same if the preferred was a perpetual issue or if Would the r ma Financial Assets 3 What is the stock's expected value 1 year from now? 4 What are the expected dividend yield, capital gains yield, and total return during the first year? e. Now assume that the stock is currently selling at $40.00. What is its expected rate of return? f. What would the stock price be if its dividends were expected to have zero growth? g. Now assume that Bon Temps's dividend is expected to grow 30% the first year, 20% the second year. h. Suppose Bon Temps is expected to experience zero growth during the first 3 years and then resume its i Finally, assume that Bon Temps's earnings and dividends are expected to decline at a constant rate of j. Suppose Bon Temps embarked on an aggressive expansion that requires additional capital. 10% the third year, and return to its long-run constant growth rate of 4%, what is the stock's value under these conditions? What are its expected dividend and capital gains yields in Year 1? Year 4? steady-state growth of 4% in the fourth year. What would be its value then? what would be its expected dividend and capital gains yields in Year 1? In Year 4? 4% per year, that is, g -4%. Why would anyone be willing to buy such a stock, and at what price should it sell? What would be its dividend and capital gains yields in each year? Management decided to finance the expansion by borrowing $40 million and by halting dividend payments to increase retained eamings. Its WACC is now 7%, and the projected free cash flows for the next three years are -$5 million, $10 million, and $20 million. After Year 3, free cash flow is projected to grow at a constant 5% what is Bon Temps's total value? If it has 10 million shares of stock and $40 million of debt and preferred stock combined, what is the price per share? k Suppose Bon Temps decided to issue preferred stock that would pay an annual dividend of $5.00 and that the issue price was $100.00 per share. What would be the stock's expected return? V expected rate of return be the same if the preferred was a perpetual issue or if Would the r ma
