QUESTION 1

The common stock of Wetmore Industries is valued at $63.7 a share. The company increases their dividend by 3.8 percent annually and expects their next dividend to be $3. What is the required rate of return on this stock?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 2

ABC's stock has a required rate of return of 17.2%, and it sells for $34 per share. The dividend is expected to grow at a constant rate of 7.2% per year. What is the expected year-end dividend, D1?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 3

ABC Inc., is expected to pay an annual dividend of $2.5 per share next year. The required return is 13.2 percent and the growth rate is 3 percent. What is the expected value of this stock five years from now?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 4

ABC's last dividend was $5.2. The dividend growth rate is expected to be constant at 31% for 3 years, after which dividends are expected to grow at a rate of 5% forever. If the firm's required return (rs) is 14%, what is its current stock price (i.e. solve for Po)?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 5

ABC just paid a dividend of D0 = $4.7. Analysts expect the company's dividend to grow by 31% this year, by 25% in Year 2, and at a constant rate of 5% in Year 3 and thereafter. The required return on this stock is 16%. What is the best estimate of the stock's current market value?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 6

A stock's next dividend is expected to be $1.2. The required rate of return on stock is 16.7%, and the expected constant growth rate is 2.8%. What is the stock's current price?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 7

A stock just paid a dividend of $0.6. The required rate of return is 18.4%, and the constant growth rate is 6.6%. What is the current stock price?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 8

ABC Company's last dividend was $2.3. The dividend growth rate is expected to be constant at 28% for 2 years, after which dividends are expected to grow at a rate of 5% forever. The firm's required return (rs) is 12%. What is its current stock price (i.e. solve for Po)?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 9

ABC is expected to pay a dividend of $3 per share at the end of the year. The stock sells for $51 per share, and its required rate of return is 12.8%. The dividend is expected to grow at some constant rate, g, forever. What is the growth rate (i.e. solve for g)?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 10

ABC Enterprises' stock is expected to pay a dividend of $1.9 per share. The dividend is projected to increase at a constant rate of 5.2% per year. The required rate of return on the stock is 17.6%. What is the stock's expected price 3 years from today (i.e. solve for P3)?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 11

If D1 = $5.1, g (which is constant) = 2%, and P0 = $26.52, what is the stock's expected dividend yield for the coming year?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 12

If D1 = $6.1, g (which is constant) = 2.9%, and P0 = $76.4, what is the stock's expected total return for the coming year?Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 13

ABC Enterprises' stock is currently selling for $68.4 per share. The dividend is projected to increase at a constant rate of 5.8% per year. The required rate of return on the stock is 12%. What is the stock's expected price 5 years from today (i.e. solve for P5)?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 14

ABC's last dividend paid was $2.5, its required return is 19.6%, its growth rate is 3.5%, and its growth rate is expected to be constant in the future. What is Sorenson's expected stock price in 7 years, i.e., what is P7?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 15

A stock is expected to pay a dividend of $1.8 at the end of the year. The required rate of return is rs = 11.7%, and the expected constant growth rate is g = 6.9%. What is the stock's current price?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 16

The common stock of Connor, Inc., is selling for $58 a share and has a dividend yield of 2 percent. What is the dividend amount?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 17

A stock just paid a dividend of D0 = $1.1. The required rate of return is rs = 14.2%, and the constant growth rate is g = 5.6%. What is the current stock price?
Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

QUESTION 18

If last dividend = $4.3, g = 8.4%, and P0 = $75, what is the stock's expected total return for the coming year?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 19

ABC Industries will pay a dividend of $2 next year on their common stock. The company predicts that the dividend will increase by 7 percent each year indefinitely. What is the dividend yield if the stock is selling for $29 a share?
Enter your answer in percentages rounded off to two decimal points. DO not enter % in the answer box.

QUESTION 20

The 8 percent annual coupon bonds of the ABC Co. are selling for $1,080.69. The bonds mature in 10 years. The bonds have a par value of $1,000. What is the before-tax cost of debt?
Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 21

ABC, Inc., has 819 shares of common stock outstanding at a price of $77 a share. They also have 375 shares of preferred stock outstanding at a price of $93 a share. There are 409, 8 percent bonds outstanding that are priced at $47. The bonds mature in 16 years and pay interest semiannually. What is the capital structure weight of the preferred stock?
Enter your answer as a percentage rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 22

You were hired as a consultant to ABC Company, whose target capital structure is 35% debt, 15% preferred, and 50% common equity. The before-tax cost of debt is 6.50%, the yield on the preferred is 6.00%, the cost of common stock is 11.25%, and the tax rate is 40%. What is the WACC?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 23

The 8 percent annual coupon bonds of the ABC Co. are selling for $880.76. The bonds mature in 10 years. The bonds have a par value of $1,000 and payments are made semi-annually? What is the before-tax cost of debt?
Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 24

ABC Inc.'s perpetual preferred stock sells for $62.8 per share, and it pays an $8.5 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of $4 per share. What is the company's cost of preferred stock for use in calculating the WACC?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 25

If the market value of debt is $104,892, market value of preferred stock is $77,164, and market value of common equity is 204,138, what is the weight of common equity?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 26

The 8.5 percent annual coupon bonds of the ABC Co. are selling for $1,179. The bonds mature in 12 years. The bonds have a par value of $1,000. If the tax rate is 30%, what is the after-tax cost of debt?
Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 27

Several years ago, the ABC Company sold a $1,000 par value bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $925 and the company'stax rate is 40%. What is the after-tax cost of debt?

QUESTION 28

The before-tax cost of debt is 9 percent. What is the after-tax cost of debt if the tax rate is 48 percent?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

QUESTION 29

ABC Industries will pay a dividend of $1 next year on their common stock. The company predicts that the dividend will increase by 4 percent each year indefinitely. What is the firm's cost of equity if the stock is selling for $39 a share?
Enter your answer in percentages rounded off to two decimal points. DO not enter % in the answer box.

QUESTION 30

If the market value of debt is $160,199, market value of preferred stock is $83,141, and market value of common equity is 257,544, what is the weight of preferred stock?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 31

The 7 percent annual coupon bonds of the ABC Co. are selling for $950.41. The bonds mature in 8 years. The bonds have a par value of $1,000 and payments are made semi-annually. If the tax rate is 35%, what is the after-tax cost of debt?
Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

QUESTION 32

The ABC Company has a cost of equity of 16.8 percent, a pre-tax cost of debt of 7.9 percent, and a tax rate of 30 percent. What is the firm's weighted average cost of capital if the proportion of debt is 58.4%?
Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.