Question 1

A stock is expected to pay a dividend of $0.75 at the end of the year.The required rate of return is rs = 10.5%, and the expected constant growth rate is g = 6.4%.What is the stock's current price?

Accepted Answer

11ea1b84_8ba1_c81b_a54a_cd8cba7ac043_TB3581_00

Question 2

50 per share is the current price for Foster Farms' stock.The dividend is projected to increase at a constant rate of 5.50% per year.The required rate of return on the stock, rs, is 9.00%.What is the stock's expected price 3 years from today?

Accepted Answer

11ea1b84_8ba2_163f_a54a_8165d27e3021_TB3581_00

Question 3

Gere Furniture forecasts a free cash flow of $40 million in Year 3, i.e., at t = 3, and it expects FCF to grow at a constant rate of 5% thereafter.If the weighted average cost of capital is 10% and the cost of equity is 15%, what is the horizon value, in millions at t = 3?

Accepted Answer

11ea1b84_8ba2_d998_a54a_4579fb404fca_TB3581_00 11ea1b84_8ba2_d999_a54a_d585b1852b70_TB3581_00

Question 4

If D? = $1.75, g (which is constant)= 3.6%, and P? = $32.00, what is the stock's expected total return for the coming year?

Accepted Answer

11ea1b84_8ba2_8b75_a54a_99d8b9960baf_TB3581_00

Question 5

If D? = $1.50, g (which is constant)= 6.5%, and P? = $56, what is the stock's expected capital gains yield for the coming year?

Accepted Answer

11ea1b84_8ba2_6463_a54a_a18a7c50f096_TB3581_00

Question 6

Kelly Enterprises' stock currently sells for $35.25 per share.The dividend is projected to increase at a constant rate of 4.75% per year.The required rate of return on the stock, rs, is 11.50%.What is the stock's expected price 5 years from now?

Accepted Answer

11ea1b84_8ba2_1640_a54a_d778b9857638_TB3581_00

Question 7

Young & Liu Inc.'s free cash flow during the just-ended year (t = 0)was $100 million, and FCF is expected to grow at a constant rate of 5% in the future.If the weighted average cost of capital is 15%, what is the firm's value of operations, in millions?

Accepted Answer

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Question 8

A share of Lash Inc.'s common stock just paid a dividend of $1.00.If the expected long-run growth rate for this stock is 5.4%, and if investors' required rate of return is 11.4%, what is the stock price?

Accepted Answer

11ea1b84_8ba1_ef2d_a54a_274db3e0b94f_TB3581_00

Question 9

Kellner Motor Co.'s stock has a required rate of return of 11.50%, and it sells for $25.00 per share.Kellner's dividend is expected to grow at a constant rate of 7.00%.What was the last dividend, D??

Accepted Answer

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Question 10

If D? = $1.25, g (which is constant)= 5.5%, and P? = $44, what is the stock's expected total return for the coming year?

Accepted Answer

11ea1b84_8ba2_6464_a54a_091bfec744ce_TB3581_00

Question 11

A stock just paid a dividend of D? = $1.50.The required rate of return is rs = 10.1%, and the constant growth rate is g = 4.0%.What is the current stock price?

Accepted Answer

11ea1b84_8ba1_ef2c_a54a_810da0fb3e08_TB3581_00

Question 12

If D? = $2.25, g (which is constant)= 3.5%, and P? = $50, what is the stock's expected dividend yield for the coming year?

Accepted Answer

11ea1b84_8ba2_3d52_a54a_a1280a29a82a_TB3581_00

Question 13

Franklin Corporation is expected to pay a dividend of $1.25 per share at the end of the year (D? = $1.25).The stock sells for $32.50 per share, and its required rate of return is 10.5%.The dividend is expected to grow at some constant rate, g, forever.What is the equilibrium expected growth rate?

Accepted Answer

11ea1b84_8ba1_ef2e_a54a_ff71ca2ff066_TB3581_00

Question 14

The Jameson Company just paid a dividend of $0.75 per share, and that dividend is expected to grow at a constant rate of 5.50% per year in the future.The company's beta is 1.15, the market risk premium is 5.00%, and the risk-free rate is 4.00%.What is Jameson's current stock price, P??

Accepted Answer

11ea1b84_8ba3_4ed0_a54a_5b455667bccb_TB3581_00

Question 15

The projected cash flow for the next year for Minesuah Inc.is $100, 000, and FCF is expected to grow at a constant rate of 6%.If the company's weighted average cost of capital is 11%, what is the value of its operations?

Accepted Answer

11ea1b84_8ba3_00ac_a54a_9df13a4ca904_TB3581_00 11ea1b84_8ba3_00ad_a54a_63e13dca7676_TB3581_00

Question 16

Barnette Inc.'s free cash flows are expected to be unstable during the next few years while the company undergoes restructuring.However, FCF is expected to be $50 million in Year 5, i.e., FCF at t = 5 equals $50 million, and the FCF growth rate is expected to be constant at 6% beyond that point.If the weighted average cost of capital is 12%, what is the horizon value (in millions)at t = 5?

Accepted Answer

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Question 17

National Advertising just paid a dividend of D? = $0.75 per share, and that dividend is expected to grow at a constant rate of 6.50% per year in the future.The company's beta is 1.25, the required return on the market is 10.50%, and the risk-free rate is 4.50%.What is the company's current stock price?

Accepted Answer

11ea1b84_8ba3_4ed1_a54a_e3cc364588ba_TB3581_00

Question 18

Dyer Furniture is expected to pay a dividend of D? = $1.25 per share at the end of the year, and that dividend is expected to grow at a constant rate of 6.00% per year in the future.The company's beta is 1.15, the market risk premium is 5.50%, and the risk-free rate is 4.00%.What is Dyer's current stock price?

Accepted Answer

11ea1b84_8ba3_27bf_a54a_438eb264416f_TB3581_00

Question 19

If D? = $1.25, g (which is constant)= 4.7%, and P? = $26.00, what is the stock's expected dividend yield for the coming year?

Accepted Answer

11ea1b84_8ba2_3d51_a54a_21c48051b8ac_TB3581_00

Question 20

Carby Hardware has an outstanding issue of perpetual preferred stock with an annual dividend of $7.50 per share.If the required return on this preferred stock is 6.5%, at what price should the preferred stock sell?

Accepted Answer

11ea1b84_8ba3_27be_a54a_1f3c30bf476f_TB3581_00

Quiz 7: Valuation of stocks and corporations

A stock is expected to pay a dividend of $0.75 at the end of the year.The required rate of return is rs = 10.5%, and the expected constant growth rate is g = 6.4%.What is the stock's current price?

50 per share is the current price for Foster Farms' stock.The dividend is projected to increase at a constant rate of 5.50% per year.The required rate of return on the stock, rs, is 9.00%.What is the stock's expected price 3 years from today?

Gere Furniture forecasts a free cash flow of $40 million in Year 3, i.e., at t = 3, and it expects FCF to grow at a constant rate of 5% thereafter.If the weighted average cost of capital is 10% and the cost of equity is 15%, what is the horizon value, in millions at t = 3?

If D? = $1.75, g (which is constant) = 3.6%, and P? = $32.00, what is the stock's expected total return for the coming year?

If D? = $1.50, g (which is constant) = 6.5%, and P? = $56, what is the stock's expected capital gains yield for the coming year?

Kelly Enterprises' stock currently sells for $35.25 per share.The dividend is projected to increase at a constant rate of 4.75% per year.The required rate of return on the stock, rs, is 11.50%.What is the stock's expected price 5 years from now?

Young & Liu Inc.'s free cash flow during the just-ended year (t = 0) was $100 million, and FCF is expected to grow at a constant rate of 5% in the future.If the weighted average cost of capital is 15%, what is the firm's value of operations, in millions?

A share of Lash Inc.'s common stock just paid a dividend of $1.00.If the expected long-run growth rate for this stock is 5.4%, and if investors' required rate of return is 11.4%, what is the stock price?

Kellner Motor Co.'s stock has a required rate of return of 11.50%, and it sells for $25.00 per share.Kellner's dividend is expected to grow at a constant rate of 7.00%.What was the last dividend, D??

If D? = $1.25, g (which is constant) = 5.5%, and P? = $44, what is the stock's expected total return for the coming year?

A stock just paid a dividend of D? = $1.50.The required rate of return is rs = 10.1%, and the constant growth rate is g = 4.0%.What is the current stock price?

If D? = $2.25, g (which is constant) = 3.5%, and P? = $50, what is the stock's expected dividend yield for the coming year?

Franklin Corporation is expected to pay a dividend of $1.25 per share at the end of the year (D? = $1.25) .The stock sells for $32.50 per share, and its required rate of return is 10.5%.The dividend is expected to grow at some constant rate, g, forever.What is the equilibrium expected growth rate?

The Jameson Company just paid a dividend of $0.75 per share, and that dividend is expected to grow at a constant rate of 5.50% per year in the future.The company's beta is 1.15, the market risk premium is 5.00%, and the risk-free rate is 4.00%.What is Jameson's current stock price, P??

The projected cash flow for the next year for Minesuah Inc.is $100, 000, and FCF is expected to grow at a constant rate of 6%.If the company's weighted average cost of capital is 11%, what is the value of its operations?

If D? = $1.25, g (which is constant) = 4.7%, and P? = $26.00, what is the stock's expected dividend yield for the coming year?

Carby Hardware has an outstanding issue of perpetual preferred stock with an annual dividend of $7.50 per share.If the required return on this preferred stock is 6.5%, at what price should the preferred stock sell?