Write answers up to two decimal places: If D1 = $1.25, g (which is constant) =...

 

Transcribed Image Text:

Write answers up to two decimal places: If D1 = $1.25, g (which is constant) = 5.5%, and Po = $41, then the dividend yield is = the capital gains yield is = % % the stock's expected total return for the coming year = % QUESTION 4 Stocks A and B have the following data. The market risk premium is 6.0% and the risk-free rate is 6.4%. Assuming the stock market is efficient and the stocks are in equilibrium and these stocks give the same amount of dividend. Beta 1.10 Constant growth rate 7.00% Fill in the following: 1. The required rate of return on Stock A is 2. The stock price of Stock A is 3. The dividend yield of Stock A is A 0.90 7.00% (higher/lower) than Stock B. (higher/lower) than Stock B. (higher/lower) than Stock B. QUESTION 6 Write your answers up to two decimal places Ryan Enterprises forecasts the free cash flows shown below. The weighted average cost of capital is 13.0%, and the FCFs are expected to continue growing at a 5.0% rate after Year 3. Year 1 FCF $15.0 2 $10.0 3 $60.00 1. What is the firm's total corporate value? S 2. If the company's market value of debt is $$200 and there is excess cash of $20.00. If the number of equity shares are 10, then what is the intrinsic value per share? QUESTION 7 As per yahoo finance, the stock price of Home depot as of Nov 1st 2021 is $366.48 and EPS (TTM) is $14.20 (TTM Trailing Twelve Months). The Home Improvement Industry P/E (TTM) ratio is 27.45. 1. Based on the Multiple Approach to Valuation, what should be the intrinsic value of Home Depot? $ 2. Is the Home Depot stock overvalued or undervalued ? Write answers up to two decimal places: If D1 = $1.25, g (which is constant) = 5.5%, and Po = $41, then the dividend yield is = the capital gains yield is = % % the stock's expected total return for the coming year = % QUESTION 4 Stocks A and B have the following data. The market risk premium is 6.0% and the risk-free rate is 6.4%. Assuming the stock market is efficient and the stocks are in equilibrium and these stocks give the same amount of dividend. Beta 1.10 Constant growth rate 7.00% Fill in the following: 1. The required rate of return on Stock A is 2. The stock price of Stock A is 3. The dividend yield of Stock A is A 0.90 7.00% (higher/lower) than Stock B. (higher/lower) than Stock B. (higher/lower) than Stock B. QUESTION 6 Write your answers up to two decimal places Ryan Enterprises forecasts the free cash flows shown below. The weighted average cost of capital is 13.0%, and the FCFs are expected to continue growing at a 5.0% rate after Year 3. Year 1 FCF $15.0 2 $10.0 3 $60.00 1. What is the firm's total corporate value? S 2. If the company's market value of debt is $$200 and there is excess cash of $20.00. If the number of equity shares are 10, then what is the intrinsic value per share? QUESTION 7 As per yahoo finance, the stock price of Home depot as of Nov 1st 2021 is $366.48 and EPS (TTM) is $14.20 (TTM Trailing Twelve Months). The Home Improvement Industry P/E (TTM) ratio is 27.45. 1. Based on the Multiple Approach to Valuation, what should be the intrinsic value of Home Depot? $ 2. Is the Home Depot stock overvalued or undervalued ?

Answer rating: 100% (QA)

Calculate the dividend yield capital gains yield and the stocks expected total return Given D1 Expected Dividend for the next year 125 g Constant Growth Rate 55 P0 Current Stock Price 41 Lets calculat... View the full answer