Project #80147 - Securities Valuation and Shareholder Expected Return Exercises

ü  Number each calculation corresponding to the exercise numbers below.

ü  Email the completed exercises to the instructor.



 

 

  1. Company A pays a dividend of $2.40 and its stock price is expected to remain constant at $16. What rate of return will an investor enjoy by owning the stock?

 

 

  1. Company B pays a dividend of $12. Its stock is expected to grow in price at a rate of 4%. How much should you pay for the stock if your expected rate of return is 12%?

 

  1. If the market price of a share of common stock in Company C is $52, the dividend is $2.25, and shareholders expect annual growth in the stock price to be 12%, what is the annual total return the shareholders expect?

 

  1. Suppose the Company D stock price is expected to grow 10% from its current market price of $35. What dividend would be needed to satisfy a shareholder total expected return of 19%?

 

 

  1. Company E has stock selling for $72 and an expected price growth rate of 3%. What dividend (in dollars) must the company pay to attract stock purchase by an investor that expects a 9.2% rate of return?

 

 

  1. USP issues10-year bonds of $1,000 face value, with a coupon (interest payment) of 5.5% ($55). What is the current face value of the bonds if investors believe a yield to maturity should be 7%?

 

 

  1. If you pay $850 for a new ten year bond with a face value of $1,000 and annual coupon payments of 6% ($60), what is the yield to maturity?

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Due By (Pacific Time) 08/25/2015 05:45 pm
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