Ch.8 Homework answers - Kevin Wallace Ch.8 Homework...

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Kevin Wallace Ch.8 Homework P.255-257 # 6,11,15,18,22,23 Grade = 48/50 6. Dividend yield = 1/2(.11) = .055 = Capital gains yield D 1 = D 0 (1 + g) D 1 = D 0 (1 + .055) \$2.59 = D0(1 + 0.055) D 1 = 0.055(\$47) D 1 = \$2.59 D 0 = \$2.59 / 1.055 D 0 = \$2.46 11. Price = (D*(1+g))/(r-g) D = 10, g = .05 and r = .14, we find a value of \$116.67 so = (116.67)/(1+r)^(10 years) = 116.67/(1.14^10) \$31.47 or the current share price 15. D2 = D1(1+ g); D3 = D2(1+g) D2=D1(1.25) D3=D1(1.25)^2 D4=D3(1.15)= D1(1.25)^2 * (1.15) D5 = D4(1.08) = D1(1.25)^2 *(1.15)*(1.08) P4 = D5/(R-g) P0 = D1/(1+R)^1 + D2/(1+R)^2 + D3/(1+R)^3+ D4/(1+R)^4+ P4/(1+R)^4 \$76 = D1/(1+0.13)^1 + D1(1.25)^1/(1+0.13)^2 + D1(1.25)^2/(1+0.13)^3 + D1(1.25)^2 * (1.15)/(1+.13)^4 + D1(1.25)^2 *(1.15)*(1.08)/(1+0.13)^5 + D1(1.25)^2 *(1.15)*(1.08)/0.13 - .08/(1+.13)^5 \$76 = 0.885*D1 + .0979*D1 + 1.083*D1+ 1.102*D1+ 1.053D1 + 21.066*D1 \$76 = 26.168*D1 D1 = \$2.90 18.

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P 19 = \$20.00 / .064 P 19 =312.5 P 0 = \$312.5/ (1.064) 19 P 0 = \$96.15 22. Given Data: Stock X Stock Y Stock Z Required Return = 16% Required Return = 16% Required Return = 16% Recent Dividend = \$2.80 Recent Dividend = \$2.80 Recent Dividend =
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This note was uploaded on 04/05/2012 for the course FINANCE 326 taught by Professor Walton during the Spring '12 term at Tulsa Community College.

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Ch.8 Homework answers - Kevin Wallace Ch.8 Homework...

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