Rs 07 13 07 75 115 difference is 16 115045 or 45

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rS= .07 + (.13-.07) (.75) = .115difference is .16-.115=.045 or 4.5%StockInvestmentBetaA$400,0001.5B600,000(0.50)C1,000,0001.25D2,000,000.75
9-2. Thomas Brothers is expected to pay a $.50 per share dividend at the end of the year(i.e.,D1=$0.50). The dividend is expected to grow at a constant rate of 7 % a year. The required rate ofreturn on the stock, rs, is 15%. What is the stock’s current value per share?
9-4. Hart Enterprises already paid a dividend. D0, of $1.25. It expects to have non-constant growth of20% for 2 years followed by a constant rate of 5% thereafter.The firm’s required return is 10%.a.
b. What is the firm's horizon, or continuing, value?
c. What is the firm's intrinsic value today, P^ 0 ?
9-6. Fee Founders has perpetual preferred stock outstanding that sells for $60 a share and pays adividend of $5 at the end of each year.What is the required rate of return?=
9-8. Ezzell Corporation issued perpetual preferred stock with a 10% annual dividend.The stockcurrently yields 8%, and its par value is $100.a.What is the stock’s value?
b.Suppose interest rates rise and pull the preferred stock’s yield up to 12%. What is its newmarket value?
9-10. Martell Mining Company’s ore reserves are being depleted, so its sales are falling. Also, becauseits pit is getting deeper each year, its costs are rising. As a result, the company’s earnings anddividends are declining at the constant rate of 5% per year.If D0=$5 and rs = 15%, what is the value ofMartell Mining’s stock.
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Term
Fall
Professor
NOWACKI
Tags
Probability theory, stock s returns

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