capital budgeting problems

capital budgeting problems - i . The Francis Company is...

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i . The Francis Company is expected to pay a dividend of D 1 = $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 4.00%. 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? ii . 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 (r s ) 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. The balance sheet and some other information are provided below. Assets Current assets $ 38,000,000 Net plant, property, and equipment 101,000,000 Total assets $139,000,000 Liabilities and Equity Accounts payable $ 10,000,000 Accruals 9,000,000 Current liabilities $ 19,000,000 Long-term debt (40,000 bonds, $1,000 par value)
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This note was uploaded on 12/06/2010 for the course FIN 3231 taught by Professor Yamoh during the Spring '10 term at Kean.

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capital budgeting problems - i . The Francis Company is...

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