SA HW5A

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University of Maryland Global Campus (UMGC) *

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330

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Finance

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Feb 20, 2024

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docx

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HW5A (Value of stock using multiples; Value and Expected rate of return on preferred stock) Question 1 A company has total assets of $561 million and total liabilities of $283 million. If the company has 47 million shares outstanding that are currently priced at $54.86 per share, what is the firm's price/book value (P/BV) ratio? Round the answer to two decimals. Your Answer: 9.27 Question 2 Big Success Co, a no-growth company, has a required rate of return of 11.44 percent. The company has earnings per share of $2.85. Calculate intrinsic value of the stock (the current stock price). Round the answer to two decimals.. Your Answer: $24.91
HW5A (Value of stock using multiples; Value and Expected rate of return on preferred stock) Question 3 UPS preferred stock pays $5 in annual dividends. If your required rate of return is 11.56 percent, how much would you be willing to pay for one share of this preferred stock? Round the answer to two decimal places. Your Answer: 43.25 Question 4 Golden Rod Corp.'s preferred stock is currently selling for $32.79. The company pays $6.80 annual dividends on this preferred stock. Which rate of return does the investor expect to receive on this stock if the stock is purchased today? Round the answer to two decimal places in percentage form. (Write the percentage sign in the "units" box) Your Answer: 20.74%
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