1) EMC has preferred stock outstanding which pays a dividend of $5.00 at the end of each year. This stock was issued in perpetuity and has no maturity date. EMC's preferred stock sells for $60 per share.

Calculate this preferred stock's required rate of return

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2) Flanigan Corporation has just paid an annual dividend of $1.50 per share (D0 = $1.50). The dividend is expected to grow 5% per year for the next 3 years, and then 10% a year thereafter.

Calculate Flanigan Corporation's expected dividend per share for each of the next 5 years.

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3) Pablo's Pizza International Inc.'s common stock currently sells for $20 per share. The stock has just paid an annual dividend of $1.00 (D0 = $1.00). The dividend is expected to grow at a constant rate of 10% per year.

a. Calculate the stock price expected 1 year from now.
b. Calculate the required rate of return on PPI's common stock.

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Solution Preview

1) EMC has preferred stock outstanding which pays a dividend of $5.00 at the end of each year. This stock was issued in perpetuity and has no maturity date. EMC's preferred stock sells for $60 per share.

Calculate this preferred stock's required rate of return

=Dividend/Stock Price
=5/60
8.33% =Answer

2) Flanigan Corporation has just paid an annual dividend of $1.50 per share (D0 = $1.50). The dividend is ...

XYZ company has a beta of -1.
The risk-free (nominal) rate is 3% per year and that the requiredrate of return on the market is 10% per year.
Find the requiredrate of return.

See attached file.
8- 1 EXPECTED RETURN
A stock's returns have the following distribution:
Calculate the stock's expected return, standard deviation, and coefficient of variation.
8- 3 REQUIREDRATE OF RETURN
Assume that the risk- free rate is 6% and the expected return on the market is 13%. What is the required

Look at attached document.
8-1 EXPECTED RETURN A stock's returns have the following distribution:
Calculate the stock's expected return, standard deviation, and coefficient of variation.
8-3 REQUIREDRATE OF RETURN Assume that the risk-free rate is 6% and the expected return on the market is 13%. What is the requ

Consider the following information and then calculate the requiredrate of return for the Scientific Investment Fund, which holds 4 stocks. The market's requiredrate of return is 15.0%, the risk-free rate is 7.0%, and the Fund's assets are as follows:
Stock
Stock Investment Beta
A

Swamp & Sand's current dividend is $1.6 per share. Analysts expect the firm's growth rate of 2% per year to continue indefinitely. The current stock price is 12.5 . Calculate the requiredreturn on equity for this firm.

The company is paying the dividend of $4.37 and has a growth rate of 6.5%. The stock is currently selling for $175.
Calculate the requiredrate of return.

A company you are researching has common stock with a beta of 1.35. Currently, Treasury bills yield 2.5%, and the market portfolio offers an expected return of 11.5%. What is the requiredreturn on this common stock?
1. 10.93%
2. 11.86%
3. 21.43%
4. 14.65%