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    Stock Valuation, Floatation Cost, Total Return, CAPM & WACC

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    The following need worked out. Please show calculations.

    1. Stock Valuation: A stock has an initial price of $100 per share, paid a dividend of $2.00 per share during the year, and had an ending share price of $125. Compute the percentage total return, capital gains yield, and dividend yield.

    2. Total Return: You bought a share of 4% preferred stock for $100 last year. The market price for your stock is now $120. What was your total return for last year?

    3. CAPM: A stock has a beta of 1.20, the expected market rate of return is 12%, and a risk-free rate of 5 percent. What is the expected rate of return of the stock?

    4. WACC: The Corporation has a targeted capital structure of 80% common stock and 20% debt. The cost of equity is 12% and the cost of debt is 7%. The tax rate is 30%. What is the company's weighted average cost of capital (WACC)?

    5. Flotation Costs: Medina Corp. has a debt-equity ratio of .75. The company is considering a new plant that will cost $125 million to build. When the company issues new equity, it incurs a flotation cost of 10%. The flotation cost on new debt is 4%. What is the initial cost of the plant if the company raises all equity externally?

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    https://brainmass.com/business/weighted-average-cost-of-capital/stock-valuation-floatation-cost-total-return-capm-wacc-629494

    Solution Summary

    The solution provide an example each for Stock Valuation, Floatation Cost, Total Return, CAPM and WACC. The market price for your stock and the total return is determined.

    $2.19