The Francis Company is expected to pay a dividend of D
= $1.25 per
share at the end of the year, and that dividend is expected to grow at
a constant rate of 6.00% per year in the future.
The company's beta is
1.15, the market risk premium is 5.50%, and the risk-free rate is
What is the company's current stock price? What us the expected
dividend yield? What is the expected capital gain yield? What is the
expected price three years from now?
Ackert Company's last dividend was $1.55.
The dividend growth rate is
expected to be constant at 1.5% for 2 years, after which dividends are
expected to grow at a rate of 8.0% forever.
The firm's required return
) is 12.0%.
What is the best estimate of the current stock price?
Cost of capital
Assume that you have been hired as a consultant by CGT, a major producer of
chemicals and plastics, including plastic grocery bags, styrofoam cups, and
fertilizers, to estimate the firm's weighted average cost of capital.
balance sheet and some other information are provided below.
Net plant, property, and equipment
Liabilities and Equity
Long-term debt (40,000 bonds, $1,000 par value)