Question: Please show your work and help me understand how the answers come about. 1. A company's preferred stock has a required rate of return of
Please show your work and help me understand how the answers come about.
1. A company's preferred stock has a required rate of return of 11.3%, a par value of $100 and pays a dividend of 6.2% of par. What is the intrinsic value of this company's preferred stock?
Show your answer in pennies without the dollar sign. E.g. 9.99
Answer --> 54.87 margin of error +/- 0.05
2. Use data below to calculate the intrinsic value of its common stock. Show your answer in pennies without the dollar sign. E.g. 9.99
Company Data:
Cost of Capital (WACC) 8%
Free Cash Flow at the end of the year $437,033
Growth Rate of Free Cash Flow 6.4%
Number of Common Shares Outstanding 252,192
Value of the company's debt $117,901
The company has no preferred stock outstanding.
Answer --> 107.84 margin of error +/- 0.05
3. A company paid a dividend today of $3.45. The dividend is expected to grow at 4.8% per year. The stock's cost of equity is 6.3%. What is the intrinsic value of this stock?
Show your answer in pennies without the dollar sign. E.g. 9.99
Answer--> 241.04 margin of error +/- 0.05
4. A company is expected to pay a dividend at the end of the year of $7.00. The dividend is expected to grow at 4% per year. The stock's cost of equity is 9.3%. What is the intrinsic value of this stock?
Show your answer in pennies without the dollar sign. E.g. 9.99
Answer--> 132.08 margin of error +/- 0.05
5. A stock paid a dividend today of $3.55. The dividend is expected to grow at 3.53% in the upcoming years. What would be the dividend for this stock 2 years from today?
Show your answer in pennies without the dollar sign. E.g. 9.99.
Answer --> 3.81 margin of error +/- 0.05
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