Problem 10-2 Calculating Returns [LO 1]Suppose a stock had an initial price of $85 per share, paid a dividend of $1.60 per shareduring the year, and had an ending share price of $72.00.a. Compute the percentage total return. (A negative answer should be indicated by aminus sign. Do not round intermediate calculations and enter your answer as apercent rounded to 2 decimal places, e.g., 32.16.)b. What was the dividend yield? (Do not round intermediate calculations and enteryour answer as a percent rounded to 2 decimal places, e.g., 32.16.)c. What was the capital gains yield? (A negative answer should be indicated by aminus sign. Do not round intermediate calculations and enter your answer as apercent rounded to 2 decimal places, e.g., 32.16.)a.Percentage total return%b.Dividend yield%c.Capital gains yield%

The method of finding the intrinsic value of the stock of a company is called stock valuation.…

Answered: Compute the percentage total return. C

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Compute the percentage total return. C

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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Problem 10-20 Arithmetic and Geometric Returns A stock has had returns of 12 percent, 30 percent, 17 percent, −18 percent, 30 percent, and −7 percent over the last six years. What are the arithmetic and geometric returns for the stock? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
Ch. 9. The next dividend payment by Skippy Jon Jon, Inc., will be $1.08 per share. The dividends are anticipated to maintain a growth rate of 4 percent, forever. The stock currently sells for $24 per share. What is the required return? (Do not round intermediate calculations and enter your answer as a percent rounded to 1 decimal place, e.g., 32.1.) Format as a percentage as "X.X"
Problem 12-1 Calculating Cost of Equity [LO 1] The Tribiani Company just issued a dividend of $2.40 per share on its common stock. The company is expected to maintain a constant 8 percent growth rate in its dividends indefinitely. If the stock sells for $44.20 a share, what is the company’s cost of equity? Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
Problem 9-10Cost of Equity The earnings, dividends, and stock price of Shelby Inc. are expected to grow at 3% per year in the future. Shelby's common stock sells for $29.75 per share, its last dividend was $2.00, and the company will pay a dividend of $2.06 at the end of the current year. Using the discounted cash flow approach, what is its cost of equity? Round your answer to two decimal places. % If the firm's beta is 0.6, the risk-free rate is 4%, and the expected return on the market is 13%, then what would be the firm's cost of equity based on the CAPM approach? Round your answer to two decimal places. % If the firm's bonds earn a return of 12%, then what would be your estimate of rs using the over-own-bond-yield-plus-judgmental-risk-premium approach? Round your answer to two decimal places. (Hint: Use the midpoint of the risk premium range.) % On the basis of the results of parts a through c, what would be your estimate of Shelby's cost of equity? Assume Shelby values each…
Problem 9-18 Finding the Dividend Matterhorn Corporation stock currently sells for $80 per share. The market requires a return of 9.8 percent on the firm’s stock. If the company maintains a constant 2.9 percent growth rate in dividends, what was the most recent dividend per share paid on the stock? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.)
10.3 Calculating Returns Suppose a stock had an initial price of $76 per share, paid a dividend of $1.95 per share during the year, and had an ending share price of $68. Compute the percentage total return.
Problem 11-16 Scenario Analysis (LO3) The common stock of Escapist Films sells for $25 a share and offers the following payoffs next year: Dividend Stock Price Boom $ 0 $ 18 Normal economy 1 26 Recession 3 34 The common stock of Leaning Tower of Pita Inc. is selling for $80 and offers these payoffs next year: Dividend Stock Price Boom $ 8 $ 240 Normal economy 4 90 Recession 0 0 Required: b-2. Calculate the expected rate of return and standard deviation of a portfolio half invested in Escapist and half in Leaning Tower of Pita. All three economic scenarios are equally likely to occur.
Problem 6-1 Stock Values The Cricket Co. just paid a dividend of $1.60 per share on its stock. The dividends are expected to grow at a constant rate of 6 percent per year indefinitely. Investors require a return of 10 percent on the company's stock. a. What is the current stock price? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) b. What will the stock price be in 3 years? (Do not round intermediate calculations and round your answer to 2 decimal places, e.g., 32.16.) c. What will the stock price be in 12 years
Rework Table 7.4 for horizon years 1, 2, 3, and 10, assuming that investors expect the dividend and the stock price to increase at only 6% a year and that each investor requires the same 12% expected return. The company will pay a dividend of $5.10 at the end of the first year. (Do not round intermediate calculations. Round your answers to 2 decimal places.) Horizon (years) PV (Dividends) PV (Terminal Price) Value per Share 1 2 3 10
9.2. Stock Values The next dividend payment by Skippy, Inc., will be $2.95 per share. The dividends are anticipated to maintain a growth rate of 4.8 percent, forever. If the stock currently sells for $53.10 per share, what is the required return?
1. Problem 9.02 (Constant Growth Valuation) Tresnan Brothers is expected to pay a \$3.30 per share dividend at the end of the year(1.e.D1=53.20). The dividend is expected to grow at a constant rate of 94 a year. The required rate of tetura on the stock,fmis16%. What is the stock's current value per share? Round vour answer to the nearest cent.
10.2 Calculating Yields Suppose a stock had an initial price of $76 per share, paid a dividend of $1.95 per share during the year, and had an ending share price of $84. what was the dividend yield? The capital gains yield?

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