Requirement 1
To Calculate:
The yesterday's closing price of the firm
Introduction:
Stock exchanges are markets where securities can be bought as well as sold. New York Stock Exchange is one amongst the several markets where investors could sell their shares or they could purchase their shares of stock.
Requirement 2
To Calculate:
The number of shares that can be purchased for $5000
Introduction:
Stock exchanges are markets where securities can be bought as well as sold. New York Stock Exchange is one amongst the several markets where the investors could sell their shares or they could purchase their shares or stock.
Requirement 3
To Calculate:
The annual dividend income from those shares
Introduction:
Stock exchanges are markets where securities can be bought as well as sold. New York Stock Exchange is one amongst the several markets where the investors could sell their shares or they could purchase their shares or stock.
Requirement 4
To calculate:
The earnings per share
Introduction:
Stock exchanges are markets where securities can be bought as well as sold. New York Stock Exchange is one amongst the several markets where the investors could sell their shares or they could purchase their shares or stock.
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INVESTMENTS (LOOSELEAF) W/CONNECT
- Research online to find a company that bought back shares of its own stock (treasury stock) within the last 6–12 months. Why did it repurchase the shares? What happened to the companys stock price immediately after the repurchase and in the months since then? Is there any reason to think the repurchase impacted the price?arrow_forwardThe Castle Company recently reported net profits after taxes of $15.8 million. It has 2.5 million shares of common stock outstanding and pays preferred dividends of $1 million a year. The company’s stock currently trades at $60 per share. Compute the stock’s earnings per share (EPS). What is the stock’s P/E ratio? Determine what the stock’s dividend yield would be if it paid $1.75 per share to common stockholders.arrow_forwardCALCULATING THE WACC Here is the condensed 2019 balance sheet for Skye Computer Company (in thousands of dollars): Skyes earnings per share last year were 3.20. The common stock sells for 55.00. last years dividend (D0) was 2.10, and a flotation cost of 10% would be required to sell new common stock. Security analysts are projecting that the common dividend will grow at an annual rate of 9%. Skyes preferred stock pays a dividend of 3.30 per share, and its preferred stock sells for 30.00 per share. The firms before-lax cost of debt is 10%, and its marginal tax rate is 25%. The firms currently outstanding 10% annual coupon rate, long-term debt sells at par value. The market risk premium is 5%, the risk-free rate is 6%, and Skyes beta is 1.516. The firms total debt, which is the sum of the companys short-term debt and long-term debt, equals 1.2 million. a. Calculate the cost of each capital component, that is, the after-tax cost of debt, the cost of preferred stock, the cost of equity from retained earnings, and the cost of newly issued common stock. Use the DCF method to find the cost of common equity. b. Now calculate the cost of common equity from retained earnings, using the CAPM method. c. What is the cost of new common stock based on the CAPM? (Hint: Find the difference between r1 and rs as determined by the DCF method, and add that differential to the CAPM value for rs.) d. If Skye continues to use the same market-value capital structure, what is the firms WACC assuming that (1) it uses only retained earnings for equity and (2) if it expands so rapidly that it must issue new common stock?arrow_forward
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