A stock is currently trading for $38. The company has a price-earnings multiple of 10. There are 100 million shares outstanding. Your model indicates that the stock is actually worth $28. The company announces that it will use $300 million to repurchase shares. a. After the repurchase, what is the value of the stock, according to your model? Do not round intermediate calculations. Round your answer to the nearest cent. b. After the repurchase, what is the actual price-earnings multiple of the stock? Do not round intermediate calculations. Round your answer to two decimal places. c. If the company had used the $300 million to pay a cash dividend instead of doing a repurchase, how would the value of the stock have changed, according to your model? Do not round intermediate calculations. Round your answer to the nearest cent. The market value of the stock is now $

A stock is currently trading for $38. The company has a price-earnings multiple of 10. There are 100 million shares outstanding. Your model indicates that the stock is actually worth $28. The company announces that it will use $300 million to repurchase shares. a. After the repurchase, what is the value of the stock, according to your model? Do not round intermediate calculations. Round your answer to the nearest cent. b. After the repurchase, what is the actual price-earnings multiple of the stock? Do not round intermediate calculations. Round your answer to two decimal places. c. If the company had used the $300 million to pay a cash dividend instead of doing a repurchase, how would the value of the stock have changed, according to your model? Do not round intermediate calculations. Round your answer to the nearest cent. The market value of the stock is now $

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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QUESTION 12 (Quantitative Question) A stock market comprises 4800 shares of stock A and 1800 shares of stock B. Assume the share prices for stocks A and B are $20 and $35, respectively. If you have $15,000 to invest and you want to hold the market portfolio, how much money (in $) will you invest in Stock A? Stock B? Write the answers both in the space provided and on the empty pages on which you will also show your work.
11 The following problem refers to the stock table for Kired, inc ( a computer company) given below . use the stock table to answer the following questions. Where necessary, round the dollar amounts to the nearest cent. A. what were the high and low prices for a share for the past 52 weeks? High price = Low price= B. if you owned 700 shares of this stock last week, what dividend did you receive? $_____ c. what is the annual return for the dividens alone? How does this compared to a bank offering a 3% interest rate? ___% d. how many shares of this company‘s stock were straight it yesterday? ____ shares E.What where are the high and low prices for a share yesterday? High price=___ Low price=____ f. what was the price at which is share traded when the stock exchange close yesterday? $_____ g. what was the change in price for a share of stock from the market close to two days ago to yesterday market close? -$____ H. compute the companies animal earnings per share using:…
QUESTION 17 A company has preferred stock that pays a constant $2.8 per share dividend. If the stock's required return is 8.9%, how much should you be willing to pay for a share of the stock? Round your final answer to two decimal places (don't round intermediate calculations). Click Save and Submit to save and submit. Click Save All Answers to save all answers.
which one is correct? QUESTION 11 Exhibit 1.7 USE THE INFORMATION BELOW FOR THE FOLLOWING PROBLEM(S) You purchased 100 shares of GE common stock on January 1, for $29 a share. A year later you received $1.25 in dividends per share and you sold it for $28 a share. Refer to Exhibit 1.7. Calculate your holding period return (HPR) for this investment in GE stock. a. 0.9655 b. 1.0973 c. 1.0804 d. 1.0086 e. 1.0357
Question 7: The balance sheet for Quinn Corp., is shown here in market value terms. There are 12,000 shares of stock outstanding. The company has declared a dividend of $1.45 per share. The stock goes ex dividend tomorrow. Ignoring any tax effects, what is the stock selling for today? What will it sell for tomorrow? What will the balance sheet look like after the dividends are paid? Market Value Balance Sheet $ 49,300 355,000 Equity $404,300 Cash Fixed assets Total $404,300 Total $404,300
Question content area top Part 1 (Preferred stock valuation) Kendra Corporation's preferred shares are trading for $40 in the market and pay a $6.40 annual dividend. Assume that the market's required yield is 14 percent. a. What is the stock's value to you, the investor? b. Should you purchase the stock? Question content area bottom Part 1 a. The value of the stock to you, the investor, is $enter your response here per share. (Round to the nearest cent.) Part 2 b. Should you acquire the stock? (Select from the drop-down menus.) You ▼ should should not acquire the stock because it is currently ▼ overpriced underpriced in the market.
first growth rate second growth rate 0.2518 dividend 2.31 0.0479 discount rate 0.1443 1 2 3 4 year Dividend expected 2.891658 3.619777 4.531237 5.672203 7.100464 7.440576 77.1844 discounted dividend 2.52701 2.764408 3.024107 3.308203 42.9586 price 54.58233
4. Problem 10.14 (Cost of Preferred Stock including Flotation) eBook Travis Industries plans to issue perpetual preferred stock with an $11.00 dividend. The stock is currently selling for $91.00, but flotation costs will be 5% of the market price, so the net price will be $86.45 per share. What is the cost of the preferred stock, including flotation? Round your answer to two decimal places. %
#4 A stock just paid a dividend of $2.35. The dividend is expected to grow at 26.20% for five years and then grow at 3.89% thereafter. The required return on the stock is 10.06%. What is the value of the stock? Submit Answer format: Currency: Round to: 2 decimal places. Show Hint C unanswered not submitted Attempts Remaining: Infinity
#6 A stock just paid its annual dividend of $1.50 per share. This dividend increases at an annual rate of 2 percent. What is the cost of equity if the stock is currently selling for $56 a share? #6 chioces 4.68% 4.73% 4.97% 4.91% 4.81% please do it in 10 minutes will upvote
v Question Completion Status: QUESTION 1 A company has stock that just paid a $2.9 per share dividend. The dividend is expected to grow at 17% over the next year and then grow at a constant 3% per year forever. If the stock's required return is 10%, how much should you be willing to pay for a share of the stock? Round your final answer to two decimal places (don't round intermediate calculations). QUESTION 2 Save All Click Save and Submit to save and submit. Click Save All Answers to save all answers.
QUESTION 7 There are 100,000 shares outstanding. The total market value of the equity is $1 million, so the stock sells for $10 per share. Eamings per share (EPS) are $49,000/100,000 = $.49, and the price-eamings ratio (PE) is $10/$.49 = 20.4. One option the company is considering is a $300,000/100,000 = $3 per share extra cash dividend. Altematively, the company is thinking of using the money to repurchase shares of stock O 1.10,000 O2.20.000 0 3.30,000 O 4.300,000

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