Phoenix Company common stock is currently selling for 20 per share Security

Phoenix company common stock is currently selling for

This preview shows page 7 - 10 out of 11 pages.

Question 22. 22. Phoenix Company common stock is currently selling for $20 per share. Security analysts at Smith Blarney have assigned the following probability distribution to the price of (and rate of return on) Phoenix stock one year from now:PriceRate of ReturnProbability$16 -20%0.25200%0.3024+20%0.2528+40%0.20Assuming that Phoenix is not expected to pay any dividends during the coming year, determine the expected rate of return on Phoenix Stock. (Points : 3) 8%0%10%40%Question 23. 23. Phoenix Company common stock is currently selling for $20 per share. Security analysts at Smith Blarney have assigned the following probability distribution to the price of (and rate of return on) Phoenix stock one year from now:PriceRate of ReturnProbability$16 -20%0.25200%0.3024+20%0.2528+40%0.20Assuming that Phoenix is not expected to pay any dividends during the coming year, determine the coefficient of variation for the rate of return on Phoenix stock. (Points : 3)
Background image
Question 24. 24. Calculate the after-tax cost of preferred stock for Ohio Valley Power Company, which is planning to sell $100 million of $3.25 cumulative preferred stock to the public at a price of $25 per share. Flotation costs are $1.00 per share. Ohio Valley has a marginal income tax rate of 40%. (Points : 3) Question 25. 25. The Allegheny Valley Power Company common stock has a beta of 0.80. If the current risk-free rate is 6.5% and the expected return on the stock market as a whole is 16%, determine the cost of equity capital for the firm (using the CAPM). (Points : 3) Question 26. 26. The following financial information is available on Rawls Manufacturing Company:Current per share market price$48.00Current (t = 0) per share dividend$3.50Expected long-term growth rate5.0%
Background image
Rawls can issue new common stock to net the company $44 per share. Determine the cost of internal equity capital using the dividend capitalization model approach. (Compute answer to thenearest 0.1%). (Points : 3) 12.3%13.4%13.0%12.7%
Background image
Image of page 10

You've reached the end of your free preview.

Want to read all 11 pages?

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture

  • Left Quote Icon

    Student Picture