Warning: call_user_func_array() expects parameter 1 to be a valid callback, function 'wpdocs_custom_excerpt_length' not found or invalid function name in /home/myonysqo/myonlinehomeworkhelper.com/wp-includes/class-wp-hook.php on line 287

Williams has a beta of 2.0 while Hemberg has a beta of 0.4. The risk-free rate is 5%, and the required rate of return on an average stock is 12%. The expected rate of inflation falls by 1%, the real risk-free rate remains constant, the required return on the market falls to 10%, and all betas remain constant. After all these changes what will be the difference in the required return for Williams and Hemberg.

josh
September 19, 2015 0 Comment

Williams has a beta of 2.0 while Hemberg has a beta of 0.4. The risk-free rate is 5%, and the required rate of return on an average stock is 12%. The expected rate of inflation falls by 1%, the real risk-free rate remains constant, the required return on the market falls to 10%, and all betas remain constant. After all these changes what will be the difference in the required return for Williams and Hemberg.

Do the following exercise:

Magoo Contacts & Glasses, Inc. is expected to generate 300 million in free cash flow next year, and the FCF is expected to grow at a constant rate of 3% per year indefinitely. Magoo has no debt or preferred stock, and its WACC is 8%, If Magoo has 40 million of shares of stock outstanding what is the stock’s value per share?

!!!!!!!Then, please answer the following question: How can CAPM be used to estimate a stock’s required rate of return?!!!!!!!!

Williams has a beta of 2.0 while Hemberg has a beta of 0.4. The risk-free rate is 5%, and the required rate of return on an average stock is 12%. The expected rate of inflation falls by 1%, the real risk-free rate remains constant, the required return on the market falls to 10%, and all betas remain constant. After all these changes what will be the difference in the required return for Williams and Hemberg.

Exercise 2

VeggieStrips has been growing at a rate of 8% per year in recent years. This growth is expected to last for another 3 years, then decline to 3%.

1. If D(0) = $1.60 and r(s) =10%, what is VS stock worth today? What are its expected dividend and capital gains yield at this time (year1)?

2. Assume that VS period of 8% a year growth will last 6 years instead of 3. How would this affect the price, dividend yield, and capital gains yield. Answer in words only.

3. What will VS dividend yield and capital gains yield be once the 8% growth ends?

4. Of what interest to investors is the changing relationship between dividend and capital gains yields over time?

Q1. Magoo Contacts & Glasses, Inc. is expected to generate 300 million in free cash flow next year, and the FCF is expected to grow at a constant rate of 3% per year indefinitely. Magoo has no debt or preferred stock, and its WACC is 8%, If Magoo has 40 million of shares of stock outstanding what is the stock’s value per share?

1. Then, please answer the following question: How can CAPM be used to estimate a stock’s required rate of return?

Q2.
VeggieStrips has been growing at a rate of 8% per year in recent years. This growth is expected to last for another 3 years, then decline to 3%.
1. If D(0) = $1.60 and r(s) =10%, what is VS stock worth today? What are its expected dividend and capital gains yield at this time (year1)?
2. Assume that VS period of 8% a year growth will last 6 years instead of 3. How would this affect the price, dividend yield, and capital gains yield. Answer in words only.
3. What will VS dividend yield and capital gains yield be once the 8% growth ends?
4. Of what interest to investors is the changing relationship between dividend and capital gains yields over time?

These questions are need to be solved on EXCEL !

Facebook
Twitter
Google+
  • 100% Original Essays Guaranteed
  • 8 Hrs Delivery Available
  • Original and creative work
  • Timely delivery guaranteed
  • 100% confidentiality guarantee
  • Variety of disciplines, topics, and deadlines
  • Discounts offered on every custom-ordered paper
  • Original papers written from scratch;
  • 100% confidential;
  • 100% plagiarism-free;
  • Fast turn-around time;
  • Direct communication with the writer;
  • Instant email delivery;
  • Free plagiarism reports;
  • 24/7 customer support team.
  • Choose your font
  • 12 point font size
  • Double-sized
  • Over 275 words/page
  • Text aligned left
  • One inch margin

We Accept

myonlinehomeworkhelper

you have a money back guarantee if you are not satisfied with our services