1. Julio purchased a stock one year ago for $27. The stock is now worth $32, and the total return to Julio for owning the stock was 37 percent. What is the dollar amount of dividends that he received for owning the stock during the year?

2. Babs purchased a piece of real estate last year for $85,000. The real estate is now worth $102,000. If Babs needs to have a total return of 25 percent during the year, then what is the dollar amount of income that she needed to have to reach her objective?

3. The beta of Elsenore, Inc., stock is 1.6, whereas the risk-free rate of return is 8 percent. If the expected return on the market is 1.5 percent, then what is the expected return on Elsenore?

4. The risk-free rate of return is currently 3 percent, whereas the market risk premuium is 6 percent. If the beta of Lenz, Inc., stock is 1.8. then what is the expected return on Lenz?

Solution Preview

1. Julio purchased a stock one year ago for $27. The stock is now worth $32, and the total return to Julio for owning the stock was 37 percent. What is the dollar amount of dividend that he received for owning the stock during the year?

Capital Gain=$32-$27=$5
Total Return=$27*37%=$9.99

Dividend Return=Total Return-Capital ...

Solution Summary

There are four basic problems in finance. Solutions to given problems explain the methodology to find out the dollar return and rate of return in different cases.

Calculating ROR and Incremental ROR in the Given Cases. ... 5-83: The incremental rate of return for the ... given problems depict the methodology to calculate ROR and ...

... A financial analysis for calculating current and quick ratios ... of the company's ratios you calculate won't ... Ratios are calculated in different ways, however, you ...

... IRR is calculated by using MS Excel functions as well as annuity tables. ... Required. a. Calculate the internal rate of return of the investment opportunity. ...

... 8. Calculate expected portfolio return kp, for each of ... standard deviation of expected portfolio returns, skp, over ...Calculate the present value of the annuity ...

... Here is calculating the standard deviation using excel ... Alternatively we can calculate the covariance between ... σ12 = 21.2180 σ2= 8.1668 (calculated in question ...

... It is calculated as follows: ... To calculate the. ... Calculations for Average Inventory figures (used for calculating inventory turnover) above are as follows: ...

... of the security be considered when calculating the regression ... and fool-proof methods existed to calculate (rather than forecast) the market return over the ...

... Evaluate the company's financial performance by calculating and interpreting the profitability ... The return on shareholder's equity is calculated to know ...

... DDM) and demonstrate its use in calculating the justifiable ... or one can calculate the required rate of return r ... r and g should be calculated using different ...