Question
I need this broken down into the simplest way to solve them. I have the answers to each question but the answers mean nothing if
I need this broken down into the simplest way to solve them. I have the answers to each question but the answers mean nothing if I don't know how to get there.
7.1- One year ago, James Sirlank bought Dell Computer common stock for $20 per share. Today the stock is selling for $19 per share. During the year, James received four dividend payments, each in the amount of $0.20 per share. (a) What rate of return did James earn during the year? (b) What were the (1) dividend yield and (2) the capital gains yield associated with the stock for the year?
7.3- Express Surgery Center's (ESC) preferred stock, which has a par value equal to $110 per share, pays an annual dividend equal to 9 percent of the par value. If investors require a 15 percent return to purchase ESC's preferred stock, what is the stock's market value?
7.5- Out-of-Sight Telecommunications (OST) had preferred stock outstanding with a par value of $40 per share that pays an annual dividend equal to 5 percent. (a) If investors who purchase similar investments require a 10 percent return, what is the market value of OST's preferred market stock? (b) What would be the market value of the stock if investors require an 8 percent return?
7.7- Alpine Ski Resort has grown at a constant rate, which equals 4 percent, for as long as it has been in business. This growth rate is expected to continue long into the future. A couple of days ago, Alpine paid common stockholders a dividend equal to $3 per share. If investors require a 10 percent rate of return to purchase Alpine's common stock, what is the market value of its common stock?
7.9-Suppose your company is expected to grow at a constant rate of 6 percent long into the future. In addition, its dividend yield is expected to be 8 percent. If your company expects to pay to pay a dividend equal to $1.06 per share at the end of the year, what is the value of your firm's stock?
7.11- Since it has been in business, Fools Gold Jewelry has never paid a dividend. The company will not pay a dividend at the end of this year. However, two years from today- at the end of Year 2- Fools Gold expects to pay a dividend equal to $0.50 per share, which it plans to increase by 6 percent each year thereafter for the remainder of the company's life. If investors require a 14 percent rate of return to purchase its common stock, what should be the market value of Fools Gold's stock today?
7.14-Forral Company has never paid a dividend. But, the company plans to start paying dividends in two years-that is, at the end of Year. The first dividend is expected to equal $2 per share. The second dividend and every dividend thereafter are expected to grow at a 5 percent rate. If investors require a 15 percent rate of return to purchase Forral's common stock, what should be the market value of its stock today?
7.15- Xtinct Artifacts has not paid a dividend during the past 10 years. However, at the end of this year, the company plans to pay a $1.50 dividend and a $2 dividend the following year (Year 2). Starting in three years, the dividend will begin to grow by 5 percent each year for as long as the firm is in business. If investors require an 11 percent rate of return to purchase Xtinct's common stock, what should be the market value of its stock today?
7.16- Sparkle Jewelers expects to pay dividends (per share) of $0.60, $0.90, $2.40, and $3.50 during the next four years. Beginning in the fifth year, the dividend is expected to grow at a rate of 4 percent indefinitely. If investors require a 20 percent return to purchase Sparkle's stock, what is the current value of the company's stock?
7.17- Georgetown Motorcars' (GM) common stock normally sells for 19 times its earnings; that is, its P/E ratio equals 19. If GM's earnings per share are $3.70, what should be its stock price under normal circumstances?
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