[Related to Solved Problem 6.2] Suppose that Coca-Cola is currently paying a dividend of $1.46 per share. the dividend is expected to grow at a rate of 4% per year, and the rate of return investors require to buy Coca-Cola's stock is 9%. Calculate the price per share for Coca-Cola's stock The price per share of Coca-Cola stock is S Round your response to two decimal places)
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![[Related to Solved Problem 6.2] Suppose that Coca-Cola is currently paying a dividend of $1.46 per share, the dividend is expected to grow at a rate of 4% per year, and the rate of return investors require to buy Coca-Cola's stock is 9%. Calculate the price per share for Coca-Cola's stock.
The price per share of Coca-Cola stock is $. (Round your response to two decimal places.)](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb430af59-8a3c-4bf2-a5a7-fa3d60572d80%2F4cdb2a6c-0b72-40e6-bb31-840158a1b712%2F0il0bab_processed.jpeg&w=3840&q=75)
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- You currently own 600 shares of JKL, Inc. JKL is an all-equity firm that has 75,000 shares of stock outstanding at a market price of $40 a share. The company’s earnings before interest and taxes are $140,000. JKL has decided to issue $1 million of debt at 8 percent interest. This debt will be used to repurchase shares of stock. If the cost of equity is 25%, the WACC is 16% and cost of debt is 10%, what will be the implied D/E ratio?The residual dividend theory suggests that: a. Firms should pay dividends only if the net income is higher than firm capital needs b. Dividends should be paid if Net Income -Debt Ratio*Capital Budget is positive c. Dividend should be paid if Net Income - % Equity in Capital Structure*Capital Budget is greater than zero d. Dividends should be paid on the basis of a constant payout ratio e. Dividends should be paid if free cash flows to the firm are positiveYou are managing a portfolio of $1 million. Your target duration is 11 years, and you can choose from two assets: a zero coupon bond with maturity 5 years, and a perpetuity, the yield is: A. .688 B. .417 C. .583 D. .312
- Suppose there is a cyber attack on the United States. The hackers manage to steal some wealth from US citizens. They also manage to delete some US companies' Research & Development blueprints, which diminishes the companies' investment opportunities in the future. Which of the following statements about the corporate bond markets is most likely true? A. Lower wealth increases bond demand. Fewer investment opportunities increase bond supply. The effect on bond prices is not exactly clear without knowing by how much demand and supply increase exactly. B. Lower wealth reduces bond demand. Fewer investment opportunities reduce bond supply. So the price of bonds rises. C. Lower wealth reduces bond demand. Fewer investment opportunities increase bond supply. So the price of bonds falls. D. Lower wealth increases bond demand. Fewer investment opportunities reduce bond supply. So the price of bonds rises. E. Lower wealth reduces bond demand. Fewer investment opportunities reduce bond…In an economy, the capital share of GDP is about 30 percent, the average growth in output is about 3 percent per year, the depreciation rate is about 4 percent per year, and the capital–output ratio is about 2.5. Suppose that the production function is Cobb–Douglas, so that the capital share in output is constant, and that the economy has been in a steady state. a. What must the saving rate be in the initial steady state? b. What is the marginal product of capital in the initial steady state? c. Suppose that public policy raises the saving rate so that the economy reaches the Golden Rule level of capital. What will the marginal product of capital be at the Golden Rule steady state? Compare the marginal product at the Golden Rule steady state to the marginal product in the initial steady state. Explain. d. What will the capital–output ratio be at the Golden Rule steady state? e. What must the saving rate be to reach the Golden Rule steady state?1 a) Which of the following statements is correct? A. Firms that use large amounts of operating leverage will find that their EBIT will be more variable than firms that do not. B. If a 20% change in sales results in a 10% change in EBIT, we would say that the degree of operating leverage (DOL) is 2. C. The use of higher debt financing concentrates the firm’s business risk onto more shareholders, making the stock less risky. D. All the answers are correct. E. If a firm’s operating costs are all variable, then any variation in sales will be less than the variation in EBIT. ------------------------------------------------------------------------------------------------------------------------------------ 1 b)Which of the following statements is incorrect? A. We would say that a firm with the high variability of EBIT has high levels of business risk. B. If a firm is selling widgets for $30 per unit, while variable costs are $20 per unit and fixed costs total $100,000, then the firm must…
- Please answer along with the excel formulas - 1. Sue now has $125. How much would she have after 8 years if she leaves it invested at 8.5% with annual compounding? $205.83 $216.67 $228.07 $240.08 $252.08 2. Suppose you have $1,500 and plan to purchase a 5-year certificate of deposit (CD) that pays 3.5% interest, compounded annually. How much will you have when the CD matures? $1,781.53 $1,870.61 $1,964.14 $2,062.34 $2,165.46 3. Last year Rocco Corporation's sales were $225 million. If sales grow at 6% per year, how large (in millions) will they be 5 years later? $271.74 $286.05 $301.10 $316.16 $331.96Please do not give solution in image formate thanku Find the Cost of Equity: The company has issued equity stock priced at $100 each for its 15,000 shares. the company is expected to give $8 as dividend for each share next year and thereafter the company is expected to grow at the rate of 5% in the foreseeable future. What is its equity cost of capital Question 2 options: 13% 17% 11% 15%14) What is a market failure? a) Uncertain and unstable movements in the price of a stock. b) A transaction that cannot be completed in the market environment. c) A product is sold below the market value d) A sudden and dramatic decline in the prices of the stock market.
- UOB Limited (“UOB”) operates in the banking industry and has a market capitalization of about S$52 billion. The list of top shareholders and board members of is shown below. Note that the holders with Wee in the name are family members.During a conversation with your colleague from the finance department, two statements caught your attention:Statement 1: UOB is such a huge corporation and the agency problem will surely exist.Statement 2: The CFO of UOB should not focus on the share price because doing so will lead to an overemphasis on short-term profits.(a) Critique Statement 1. Your answer should not exceed 300 words.(b) Critique Statement 2. Your answer should not exceed 200 words.Evaluate the following statements:S1. Any investment income of general borrowing is deducted from capitalizable borrowing cost.S2. If the asset is financed by specific borrowing but a portion is used for working capital purposes, the borrowing shall be treated as general borrowing in determining capitalizable borrowing cost. a.False, False b.False, True c.True, True d.True, FalseThe company's bank won't lend it any more money than it already has, and investment bankers have said that debentures are out of the question. The treasurer has asked you to do some research and suggest a few ways in which bonds might be made attractive enough to allow the company to borrow. Please provide a detail explanation for numbers 1-4. 1. Explain how to secure the bonds with owned assets in great detial. In what ways does it make the bonds more attractive to allow the company to borrow? 2. What is the agreement to subordinate future debt? How does it make the bonds more attractive? 3. What does providing a restrictive indenture limiting the risk in future undertakings do? How does it make the bonds more attractive? Explain in great detail. 4. How does providing a sinking fund for principal repayment make the bonds more attractive? Explain in detail.