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You require an 8.2% return on a preferred stock issued by Winter Springs Electric Company. This preferred stock pays an annual dividend of $9.50 and currently sells for $112.00 per share. a. What is the expected return on the stock: b. Based on your answer to "a" should you buy the stock? c. What is the value of this preferred stock? d. Based on your answer in "c," should you buy the stock? The dividend of Brandon Corporation common stock is expected to increase by 30% next year, 25% in the second year, 20% in the third year, and 15% in the fourth year. In year 5, the dividend is expected to begin growing at a constant 4% for the foreseeable future. Brandon has a beta of 0.8 and paid a dividend of $1.30 last year. The market risk premium is 7.0%, the risk-free rate is 5.0%, and the stock currently sells for $39.20. a. Estimate the value of the stock. b. Would you buy the stock based on your answer to "a?" Why? c. Estimate the expected return on the stock. c. Would you buy the stock based on your answer to "c?" Why? Your estimate of Firm Z's weighted average cost of capital is 12.2%. The number of shares of Firm Z common stock outstanding is 2.5 million. Last year, Firm Z's free cash flow was $9.2 million. You expect Firm Z's FCF to increase by 2.8% each year in the future. Firm Z owes its creditors a total of $14 million and it has no preferred stock outstanding. Firm Z has non-operating assets on its balance sheet of $3.1 million. What is the estimated per-share the value of Firm Z's common stock based on the information appearing above?

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M9858506

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