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

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Students Have Also Explored These Related Accounting Questions!

Q:

\f