Fi 516 Mini Case

Based on the suggestion that the focus should be on market values, compute the weights of debt, preferred stock, and common stock.

Therefore, the cost of common stock is obtained by using the dividends divided by the market price.

or fundamental potential for failure that is associated with the ongoing function of any type of business

5. What is the capital structure of the company?: Short term portion of Long Term Debt, Long Term Debt, Preferred Stock (if any), and market value of Common Stock issued and outstanding?

In Part A, I will examine liquidity and coverage ratios, assessing each company’s ability to meet its debt obligations in both the short and long term, to pay dividends, and to cover its expected operating expenses. Next, in Part B, I will inspect profitability ratios, assessing the ability of each enterprise to provide its investors with a return on their

Description: the data shows that, company is paying a dividend in the last three years and for 2010 dividend is 4.3 per share.

In this project, you will assess the financial health of the business in question, using financial analysis tools in your textbook. Please make your work neat and show all computations.

3. Calculate the cost of common stock equity and convert it into the cost of retained earnings and the cost of new issues of common stock.

g ¼ ð1 À Dividend payout ratioÞðReturn on equityÞ ¼ ð1 À 0:30Þð15%Þ ¼ 10:5%

The cost of equity refers to the minimum rate of return which a company must offer investors compensation in exchange for bearing risk and waiting for their returns (Pike et al., 2012). The return consists of two elements, the prospective dividend yield and the expected rate of growth in dividend (Pike et al., 2012). There are two ways to calculate the cost of equity which are Dividend Growth Model and Capital Asset Pricing Model (CAPM).

With the information given, we can find the cost of equity using the dividend growth model. Using this model, the cost of

$17.233
(436Baht/25.3)
 $15.59
(422.92Baht/27.2{average
exchange
rate
for
 1995,1996,1996
esOmated
})
 3
years
 6.3%
 1.9%
(We
assume
that
it
should
be
less
than

coupon,
 further
we
found
out
that
market
dividend
yield
at

 
 SET
in
1994
was
1.86%
*)

The payout ratio is set at .30 from 2006 onwards. Notice that the long-term growth rate, which settles in between 2011 and 2012, is ROE × ( 1 – dividend payout ratio ) = .10 × (1 - .30) = .07.

1. The equity stock of Rax Ltd., is currently selling for Rs. 30 per share. The dividend expected next year is Rs.2 per share. The investor’s required rate of

The market Price per Equity Share is Rs. 25. The next expected dividend per share (DPS) is Rs. 2.00 and the DPS is expected to grow at a constant rate of 8%. The preference shares are redeemable after 7 years at par and are currently quoted at Rs. 75 per share in the stock exchange. The debentures of face value of rs 100/- each are redeemable after 6 years at par and their current market quotation is Rs. 90 each. The tax rate applicable to the firm is 50%.