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Ne4ueva [31]
3 years ago
5

Consider four different stocks, all of which have a required return of 14 percent and a most recent dividend of $3.50 per share.

Stocks W, X, and Y are expected to maintain constant growth rates in dividends for the foreseeable future of 10 percent, 0 percent, and –6 percent per year, respectively. Stock Z is a growth stock that will increase its dividend by 20 percent for the next two years and then maintain a constant 12 percent growth rate thereafter. What is the dividend yield for each of these four stocks? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) What is the expected capital gains yield for each of these four stocks? (Leave no cells blank - be certain to enter "0" wherever required. A negative answer should be indicated by a minus sign. Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Business
1 answer:
nlexa [21]3 years ago
6 0

Answer:

Stock W   3.64%

Stock X  14.00%

Stock Y 21.28%

Stock Z   1.56%

Explanation:

We calculate the horizon value for each one. This will provide us with their price and with that, we solve for dividends yield

Stock W - Horizon Value

 3.50 x 1.10            3.85

-----------------  =    -----------  = 96.25

  0.14 - 0.10           0.04

Dividend yield: 3.50 / 96.25 = 0.036363636 = 3.64%

Stock X: g= 0

3.5 / 0.14 =  25

3.5 / 25 = 0.14

Stock Y g = -0.06

3.50 x (1 - 0.06) / (0.14 - (-0.06)) = 16.45

Dividend yield 3.50 / 16.45 = 0,212765957 = 21.28%

Stock Z

\left[\begin{array}{ccc}#&Dividends&Discounted\\&3.5&\\1&4.2&3.68\\2&5.04&3.88\\2&5.6448&217.17\\&TOTAL&224.73\\\end{array}\right]

First we solve for the next two dividends:

next year 3.50 x (1 + 20%) = 4.2

second year 4.20 x (1 + 20%) = 5.04

Here we solve for the horizon value of the constant grow:

5.04 x 1.12 / (0.14 - 0.12) = 282.24

now, we solve for the Present value of each one and add them together.

Getting a value of $224.73

We now solve for dividend yield: 3.50 / 224.73 = 0,01557 = 1.56%

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lions [1.4K]

Answer:

When comparing the real estate market of any region or state, there are factors for consideration:

a) Population size

b) Employment status

c) Real estate market

d) Renting strength

e) Price

f) Quality in terms of home structure and a serene environment.

Explanation:

In the question, there are two American cities up for comparison: The city of Pittsburgh and the Philadelphia city, both in the Pennsylvania region. Both cities have comfortable environments which are habitable but here, we have to choose or rather compare both. The first factor is the population size. The two cities which are in the same region, have a considerable population size but when compared, Philadelphia has the upper hand. In real estate business, population is key as a region which a better and fuller population is appreciated more. The second factor is the employment status of the inhabitants. The employment status of these two cities are commendable but Pittsburgh is quite flabbergasting. The employment rate of Pittsburgh to Philadelphia is up to 57%. Employment status is a key determinant when real estate market is mentioned because employed persons are the ones who can actually pay when due. The third factor is the real estate market. This is another factor which is very important in determining the cities' real estate market. Over the years, Philadelphia has shown positive signs of a healthy real estate market which nicks that of Pittsburgh. Other factors listed above have clearly been favourable to Philadelphia because of their location but in terms of price, Pittsburgh appears cheaper with an average price of $1258 compared to Philadelphia's $1,652.

8 0
3 years ago
Investor perception on the risk of bonds will raise their desired return.
faust18 [17]

The statement, investor perception on the risk of bonds will raise their desired return is true.

The higher an investment's risk, the greater its potential returns should be. By contrast, a very safe and low-risk investment should generally offer low returns. So, this investor perception will raise the desired return of the risk of bonds.

Generally, the higher the potential return of an investment, the higher the risk. Thus, there is no guarantee that you will actually get a higher return by accepting more risk. In this matter diversification is useful.

Hence, you can minimize the risk by making sure the company's bond you own is not a high risk company with a high probability of paying back.

To learn more about risk of bonds here:

brainly.com/question/14850768

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3 0
2 years ago
Winter's Toyland has a debt-equity ratio of .57. The pretax cost of debt is 8.2 percent and the required return on assets is 14.
True [87]

Answer:

<em>WACC 10.995</em>

Explanation:

We solve using the Weighted average cost of capital assuming a tax rate of 0% as we have to ignore taxes. Hence, we get:

WACC = K_e(\frac{E}{E+D}) + K_d(1-t)(\frac{D}{E+D})

Ke 0.14700

Equity weight 0.43

Kd 0.082

Debt Weight 0.57

t 0

WACC = 0.147(0.43) + 0.082(1-0)(0.57)

WACC 10.99500%

6 0
3 years ago
Read 2 more answers
The Canon Corporation sells ten copiers to the Title Company on October 15 for $40,000. Canon delivers the copiers to Title on O
elena-14-01-66 [18.8K]

Answer:

$0

Explanation:

In this method, the transaction reporting will be performed on an accrual basis which means whether or not the payment is paid but it is reported in the account books.

Once the expenditure is incurred or the revenues is earned the same is to be recorded in the books of accounts whether cash paid or not and in case of revenues whether cash received or not

In the given case, the Canon corporation sells on October 15 so it would be recorded on October itself .

Therefore, no revenue would be recognized on the month of November

3 0
3 years ago
Cost Flow Relationships
Lady_Fox [76]

Answer:

(A) Cost of goods sold=$7,175,000

(B) Direct material cost= $3,655,000

(C) Direct labor cost= $2,825,000

Explanation:

(A) The cost of goods sold can be calculated as follows

Cost of goods sold= Sales-gross profit

Sales= $12,375,000

Gross profit= $5,200,000

Cost of goods sold= $12,375,000-$5,200,000

= $7,175,000

(B) The direct materials cost can be calculated as follows

Direct cost of materials= materials purchased-indirect materials-materials inventory

Materials purchased= 4,125,000

Indirect materials= 180,000

Materials inventory= 290,000

Direct materials cost= 4,125,000-180,000-290,000

= $3,655,000

(C) The direct labor costs can be calculated as follows

Direct labor costs= Total manufacturing cost for the specified period-direct materials-factory overhead

Total manufacturing costs= 7,880,000

Direct materials= 3,655,000

Factory overhead= indirect labor+indirect materials+other factory overhead

= 410,000+180,000+810,000

= 1,400,000

Direct labor costs= 7,880,000-3,655,000-1,400,000

= $2,825,000

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3 years ago
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