The last dividend paid by a company was $2.20. Klein's growth rate is expected to be 10 percent for one year, after which dividends are expected to grow at a rate of 6 percent forever. The company's stockholders require a rate of return on equity (rs) of 11 percent. What is the current price of the stock?

a. $44.00
b. $46.64
c. $48.40
d. $48.64
e. $50.40

An analyst has collected the following information regarding Christopher Co.:

? The company's capital structure is 70 percent equity, 30 percent debt.
? The yield to maturity on the company's bonds is 9 percent.
? The company's year-end dividend is forecasted to be $0.80 a share.
? The company expects that its dividend will grow at a constant rate of 9 percent a year.
? The company's stock price is $25.
? The company's tax rate is 40 percent.
? The company anticipates that it will need to raise new common stock this year. Its investment bankers anticipate that the total flotation cost will equal 10 percent of the amount issued. Assume the company accounts for flotation costs by adjusting the cost of capital. Given this information, calculate the company's WACC.

a. 10.41%
b. 12.56%
c. 10.78%
d. 13.55%
e. 9.29%

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The last dividend paid by a company was $2.20. Klein's growth rate is expected to be 10 percent for one year, after which dividends are expected to grow at a rate of 6 percent forever. The company's stockholders require a rate of return on equity (rs) of 11 percent. What is the current price of the stock?

A firm has a capital structure with 40% debt, 50% equity, and 10% preferred stock. If the following information is given, calculate company's WACC.
YTM on firm's bond is 7.2%
Beta is 1.2; risk free rate 5%; market risk premium is 5%
Preferred stock pays dividend of $8 and sells for $100

Milton Parker has a capital structure that consists of $7 million of debt, $2 million of preferred stock, and $11 million of common equity, based upon current market values. Parker's yield to maturity on its bonds is 7.4%, and investors require an 8% return on Parker's preferred and a 14% return on Parker's common stock. If the

Reactive Industries has the following capital structure. Its corporate tax rate is 35 percent. What is its WACC?
SECURITY MARKET VALUE REQUIRED RATE OF RETURN
DEBT $20 Million 6%
PREFERRED STOCK $10 Million 8%
COMMON STOCK $50 Million 12%

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