STOCK VALUATION Dividend and Capital Gain Yields: div. yield = proj div/curr price, capital gains yield = (proj stock price-curr price)/curr price, total yield = div yield+capital gains yield 1. James Padilla has analyzed XYZ stocks and estimated the dividends it will pay in 2021 as well as their prices at the end of 2020. His projections are the following: the current price is P37.50, the projected dividend is P1.45, and the projected stock price is P43.00. Calculate the dividend yield, capital gains yield, and total one-year return. 2. Nadine Bernardo has also analyzed XYZ stocks and estimated the dividends it will pay next year as well as their prices at the end of the year. Her projections are the following: the current price is P24.50, the projected dividend is P0.90, and projected stock price is P26.50. Calculate the dividend yield, capital gains yield, and total one-year return. Stock Valuation Based on Projected Cash Flow: the cash flows are given, calculate the PVFk,n, and the PV for each cash flow, then add all the PV. 3. The stock of ABC Co. is expected to pay the following dividends: year 1 - P2.25, year 2 - P3.50, year 3 - P1.75, year 4 - P2.00. At the end of the 4th year, its value is expected to be P37.50. What should ABC Co. sell for today if the return on stocks of similar risk is 12%? Constant Growth Model: Po = D.(1 + g) / (k - g) 4. The Finman Company has paid an annual dividend of P2 per share for some time. Recently the board of directors voted to grow the dividend by 6% from now on. What is the most you would be willing to pay for a share of Finman Co. if you expect a 10% return on your stock investments? Pricing Preferred Stock: Pp = Dp/k 5. Gorgeous Corporation's P7 preferred was issued in 2015. The risk-appropriate interest rate for the issue is currently 11%. What is this preferred stock selling for today