As the assistant to the CFO of Johnstone Inc., you must estimate its cost of common equity. You have been provided with the following data: D0 = $0.80; P0 = $22.50; and g = 8.00% (constant). Based on the DCF approach, what is the cost of common from retained earnings?

Q: O'Brien Inc. has the following data: rRF = 5.00%; RPM = 6.00%; and b = 1.40. %3| What is the firm's…

A: Given details in the question are : rRF = Risk free rate = 5% RPM = Market risk premium = 6% b =…

Q: After researching the competitors of EJH Enterprises, you determine that most comparable firms have…

A: Price multiples give insight into the valuation of the company and help investors evaluate whether…

Q: Using CAPM calculate its cost of equity. (Observe 2 decimal places)

A: A model that represents the relationship of the required return and beta of a particular asset is…

Q: Round all answers to two decimal places except for dividend payout ratio which is rounded to four…

A: Ratio Analysis: This is the process of computing, determining, and presenting the relationship of…

Q: Adams Inc. has the following data: rRF = 4.00%; RPM = 7.00%; and b = 1.20. What is the firm's cost…

A: Cost of common equity     Using CAPM       Formula       Risk free rate + ( Market rate…

Q: Using the following data, calculate the firm’s price earnings ratio.  Show your work and briefly…

A: Price earnings ratio is obtained by dividing he price per share by the earnings per share.   Price…

Q: Assume that you are a consultant to Broske Inc., and you have been provided with the following data:…

A: Next dividend (D1) = $0.80 Current price (P0) = $32.50 Growth rate (G) = 8.00%   Formula Cost of…

Q: Assume the following relationships for the Caulder Corp.:Sales/Total assets…

A: The question is based on the concept of ratio analysis of financial data of a company.

Q: You were asked to estimate the cost of equity based on the three most commonly used methods and then…

A: Cost of equity: It represents the cost of raising equity capital for the firm to expand its…

Q: Assume that you are a consultant to a company, and you have been provided with the following data:…

A: The cost of equity can be calculated with the help of dividend discount model

Q: Grey Wolf, Inc., has current assets of $2,090, net fixed assets of $9,830, current liabilities of…

A: CURRENT ASSETS = 2090FIXED ASSETS = 9830CURRENT LIABILITY = 1710LONG TERM DEBT = 4520

Q: A company has a Return on Equity of 0.23, a Profit Margin of 0.1 and Total Asset Turnover of 0.4.…

A: As per Dupont Analysis, Return on equity = Net Profit Margin * Asset Turnover ratio * Equity…

Q: You are the new CFO of Risk Surfing Ltd, which has current assets of $ 7 920, net fixed assets of…

A: “Hey, since your question has multiple sub-parts, we will solve first three sub-parts for you. If…

Q: As a consultant to Bass Inc, you have been provided with the following data D1= $0.67, P0= $27.50…

A: Dividend first year (D1)=0.67 Current stock price (P0)=27.50 Constant growth rate (g) =8%

Q: The CFO of Lenox Industries hired you as a consultant to help estimate its cost of capital. You have…

A: a) Cost of equity = Yield on the firm's bond + risk premium over its debt cost

Q: what is the estimated cost of ordinary equity?

A: Cost of ordinary equity refers to the cost incurred by the company for issuing new ordinary equity.…

Q: O'Brien Inc. has the following data:   rRF = 5.00%; RPM = 6.00%; and b = 1.40.   What is the…

A: Given the following information: Risk free rate: 5% Risk premium: 6% Beta: 1.4

Q: Assume that you are a consultant to Broske Inc., and you have been provided with the following data:…

A: The rate of return that is expected by investors on their equity investment is term as the cost of…

Q: The CFO of Lenox Industries hired you as a consultant to help estimate its cost of capital. You have…

A: there are three method to calculate cost of capital: bond yield +risk premium  CAPM DCF

Q: You were hired as a consultant to Keys Company, and you were provided with the following data:…

A: WACC = (Weight of debt * cost of debt) + (Weight of preferred * Cost of preferred) * (Weight of…

Q: A company hired you as a consultant to help estimate its cost of capital. You have obtained the…

A: The cost of equity can be calculated from the dividend discount model

Q: You are a finance intern at Chambers and Sons and they have asked you to help estimate the company's…

A: given, D1 = $2.00 P0 = $27.00 g = 4.00% (constant) F = 5.00%

Q: If a corporation earns $240,000 and the payout ratio (proportion distributed) is 35 percent, what is…

A: Given : Income  =  $240,000Payout Ratio  =  35% Dividends  =  Income * Payout Ratio…

Q: If Rogers, Incorporated, has an equity multiplier of 1.57, total asset turnover of 1.70, and a…

A: The ROE is a measure of how well a company performs with the money that its shareholders have…

Q: The book value per share  a. is usually a close approximation of the market price per share. b. is…

A: Book value is used by the investor for analyzing his investment worth.

Q: The following information relates to three companies in the same industry…

A: The Price-Earnings Ratio: The price-earnings ratio is a relative measure of the company's stock…

Q: If Roten Rooters, Inc., has an equity multiplier of 1.27, total asset turnover of 2.10, and a profit…

A: Calculate the return on equity (ROE) as follows:

Q: If we know that a firm has a net profit margin of 4.5 % total asset turnover of 0.65, and a…

A: Calculation of ROE:The ROE is 4.30%.

Q: If we know that a firm has a net profit margin of 4.3 %​, total asset turnover of 0.77​, and a…

A: The computation of ROE is as follows: Hence, the return on investment is 4.50%

Q: A Wall Street Journal quotation for a company has the following values: Div: $1.12, PE: 18.3, Close:…

A: Dividend payout ratio can be calculated  Dividend payout ratio =Dividend par share/Earning par share…

Q: You are required to calculate different leverages, and comment which company is better in financial…

A: Formula: Contribution= Sales- Variable Cost EBIT= Contribution- Fixed Cost EBT= EBIT- Interest EAT=…

Q: O'Brien Inc. has the following data: rRF = 5.00%; RPM = 6.00%; and b = 1.70. What is the firm's cost…

A: In this problem we need to find out firm's cost of equity from retained earnings based on the CAPM.

Q: Since the firm issued new stocks, I calculated two cost of retained earnings (one is rs which is the…

A: Weighted Average Cost of Capital (WACC) is the overall cost of capital from all the sources of…

Q: A company has a Return on Equity of 0.2, a Profit Margin of 0.12 and Total Asset Turnover of 0.48.…

A: Return on Equity can be calculated using the DuPont formula. It breaks the calculation using three…

Q: Zappin’ Skeeters Corporation needs to know its cost of retained earnings. Based on the following…

A: The cost of retained earnings will be: Cost of retained earnings = Cost of equity ×(1- flotation…

Q: Vhich of the following statements is the most reasonable conclusion from the given formation below…

A: Solution Concept Return on equity is given as =net profit/total equity Working note ROE of ABC…

Q: As an Analyst you were tasked to compute for the Weighted Average Cost of Capital of various…

A: Weighted average cost of capital (WACC) is the average cost of capital of the firm from all sources…

Q: O'Brien Inc. has the following data:   rRF = 6.00%; RPM = 7.00%; and b = 1.40.   What is the…

A: Given the following information: Risk free rate: 6% Risk premium: 7% Beta: 1.40

Stock Yields

The stock yield is otherwise known as the dividend yield. The dividend yield is an annual payment of the stock dividends to the holder of a firm’s stock. The dividend yield is a financial ratio to measure the value of dividend payout every year for the relative stock price. The yield of a stock is usually shown in a percentage that discloses the expected future earnings from stock depending on the current stock price in the future. Stock yield will change depending on the market fluctuations and in accordance with the market fluctuations, the dividends will be increased or decreased by the firm.