Finance- 32 Problems- Must be worked out on Excel- Due Friday, June 5, 2015!

1. C's stock has a required rate of return of 14.1%, and it sells for $39 per share. The dividend is expected to grow at a constant rate of 7.2% per year. What is the expected year-end dividend, D₁?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

2. A stock's next dividend is expected to be $1.8. The required rate of return on stock is 16.3%, and the expected constant growth rate is 7.6%. What is the stock's current price?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

3. A stock just paid a dividend of $2.3. The required rate of return is 9.2%, and the constant growth rate is 7.2%. What is the current stock price?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

4. C Enterprises' stock is expected to pay a dividend of $1.9 per share. The dividend is projected to increase at a constant rate of 6.1% per year. The required rate of return on the stock is 17.8%. What is the stock's expected price 3 years from today (i.e. solve for P3)?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

5. C Inc., is expected to pay an annual dividend of $3.5 per share next year. The required return is 13.6 percent and the growth rate is 7.7 percent. What is the expected value of this stock five years from now?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

6. The common stock of Wet Industries is valued at $52.8 a share. The company increases their dividend by 3.3 percent annually and expects their next dividend to be $2. What is the required rate of return on this stock?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

7. C's last dividend was $4. The dividend growth rate is expected to be constant at 23% for 3 years, after which dividends are expected to grow at a rate of 5% forever. If the firm's required return (r_s) is 13%, what is its current stock price (i.e. solve for Po)?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

8. If D₁ = $2.83, g (which is constant) = 2%, and P₀ = $45.18, what is the stock’s expected dividend yield for the coming year?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

9. A stock just paid a dividend of D₀ = $1.2. The required rate of return is r_s = 19.6%, and the constant growth rate is g = 7.4%. What is the current stock price?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

10. C Company's last dividend was $1.4. The dividend growth rate is expected to be constant at 29% for 2 years, after which dividends are expected to grow at a rate of 6% forever. The firm's required return (r_s) is 13%. What is its current stock price (i.e. solve for Po)?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

11. The common stock of Connor, Inc., is selling for $38 a share and has a dividend yield of 4.6 percent. What is the dividend amount?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

12. If D₁ = $2.1, g (which is constant) = 4.9%, and P₀ = $72.7, what is the stock’s expected total return for the coming year?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

13. A stock is expected to pay a dividend of $2.4 at the end of the year. The required rate of return is r_s = 16.1%, and the expected constant growth rate is g = 6.3%. What is the stock's current price?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

14. C’s last dividend paid was $1.6, its required return is 19.3%, its growth rate is 3.6%, and its growth rate is expected to be constant in the future. What is Sorenson's expected stock price in 7 years, i.e., what is P7?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

15. C is expected to pay a dividend of $3.3 per share at the end of the year. The stock sells for $147 per share, and its required rate of return is 18.5%. The dividend is expected to grow at some constant rate, g, forever. What is the growth rate (i.e. solve for g)?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

16. C Enterprises' stock is currently selling for $79.1 per share. The dividend is projected to increase at a constant rate of 3.8% per year. The required rate of return on the stock is 12%. What is the stock's expected price 5 years from today (i.e. solve for P5)?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

17. C just paid a dividend of D₀ = $4.6. Analysts expect the company's dividend to grow by 31% this year, by 23% in Year 2, and at a constant rate of 7% in Year 3 and thereafter. The required return on this stock is 16%. What is the best estimate of the stock’s current market value?

Note: Enter your answer rounded off to two decimal points. Do not enter $ or comma in the answer box. For example, if your answer is $12.345 then enter as 12.35 in the answer box.

18. If last dividend = $4.7, g = 5.5%, and P₀ = $74.4, what is the stock’s expected total return for the coming year?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

19. The 8.5 percent annual coupon bonds of the C Co. are selling for $1,179. The bonds mature in 12 years. The bonds have a par value of $1,000. If the tax rate is 30%, what is the after-tax cost of debt?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

20. The before-tax cost of debt is 14.1 percent. What is the after-tax cost of debt if the tax rate is 53 percent?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

20. If the market value of debt is $143,698, market value of preferred stock is $17,318, and market value of common equity is 213,821, what is the weight of common equity?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

22. The 7 percent annual coupon bonds of the C Co. are selling for $950.41. The bonds mature in 8 years. The bonds have a par value of $1,000 and payments are made semi-annually. If the tax rate is 35%, what is the after-tax cost of debt?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

23. C Inc.'s perpetual preferred stock sells for $73.6 per share, and it pays an $5.7 annual dividend. If the company were to sell a new preferred issue, it would incur a flotation cost of $4 per share. What is the company's cost of preferred stock for use in calculating the WACC?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

24. The 8 percent annual coupon bonds of the C Co. are selling for $880.76. The bonds mature in 10 years. The bonds have a par value of $1,000 and payments are made semi-annually? What is the before-tax cost of debt?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

25.You were hired as a consultant to C Company, whose target capital structure is 35% debt, 15% preferred, and 50% common equity. The before-tax cost of debt is 6.50%, the yield on the preferred is 6.00%, the cost of common stock is 11.25%, and the tax rate is 40%. What is the WACC?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

26. If the market value of debt is $149,828, market value of preferred stock is $58,831, and market value of common equity is 335,517, what is the weight of preferred stock?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.

27. C Industries will pay a dividend of $2 next year on their common stock. The company predicts that the dividend will increase by 3 percent each year indefinitely. What is the firm’s cost of equity if the stock is selling for $25 a share?

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28. Several years ago, the C Company sold a $1,000 par value bond that now has 20 years to maturity and a 7.00% annual coupon that is paid semiannually. The bond currently sells for $925 and the company’s tax rate is 40%. What is the after-tax cost of debt?

29. The C Company has a cost of equity of 17.1 percent, a pre-tax cost of debt of 7.8 percent, and a tax rate of 30 percent. What is the firm’s weighted average cost of capital if the proportion of debt is 20.6%?

Note: Enter your answer rounded off to two decimal points. Do not enter % in the answer box. For example, if your answer is 0.12345 then enter as 12.35 in the answer box.

30. C Industries will pay a dividend of $3 next year on their common stock. The company predicts that the dividend will increase by 6 percent each year indefinitely. What is the dividend yield if the stock is selling for $28 a share?

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31. C, Inc., has 455 shares of common stock outstanding at a price of $99 a share. They also have 129 shares of preferred stock outstanding at a price of $80 a share. There are 514, 8 percent bonds outstanding that are priced at $56. The bonds mature in 16 years and pay interest semiannually. What is the capital structure weight of the preferred stock?

Enter your answer as a percentage rounded off to two decimal points. Do not enter % in the answer box.

32. The 8 percent annual coupon bonds of the C Co. are selling for $1,080.69. The bonds mature in 10 years. The bonds have a par value of $1,000. What is the before-tax cost of debt?

Enter your answer in percentages rounded off to two decimal points. Do not enter % in the answer box.