Questions from Corporate Finance

Q: This one’s a little harder. Suppose the current share price for

This one’s a little harder. Suppose the current share price for the firm in the previous problem is $67.25 and all the dividend information remains the same. What required return must investors be dem...

Q: Five Star Corporation will pay a dividend of $3.04

Five Star Corporation will pay a dividend of $3.04 per share next year. The company pledges to increase its dividend by 3.75 percent per year indefinitely. If you require a return of 11 percent on you...

Q: Caccamise Co. is expected to maintain a constant 3.4

Caccamise Co. is expected to maintain a constant 3.4 percent growth rate in its dividends indefinitely. If the company has a dividend yield of 5.3 percent, what is the required return on the company’s...

Q: Suppose you know that a company’s stock currently sells for $78

Suppose you know that a company’s stock currently sells for $78 per share and the required return on the stock is 10.9 percent. You also know that the total return on the stock is evenly divided betwe...

Q: Hailey Corp. pays a constant $9.45 dividend on

Hailey Corp. pays a constant $9.45 dividend on its stock. The company will maintain this dividend for the next 13 years and will then cease paying dividends forever. If the required return on this sto...

Q: Fegley, Inc., has an issue of preferred stock outstanding that

Fegley, Inc., has an issue of preferred stock outstanding that pays a $3.80 dividend every year in perpetuity. If this issue currently sells for $93 per share, what is the required return?

Q: Red, Inc., Yellow Corp., and Blue Company each will

Red, Inc., Yellow Corp., and Blue Company each will pay a dividend of $4.15 next year. The growth rate in dividends for all three companies is 4 percent. The required return for each company’s stock i...

Q: What is the payback period for the following set of cash flows

What is the payback period for the following set of cash flows? Year …………………….. Cash Flow 0 …………………………… −$7,700 1 ……………………………….. 1,900 2 ……………………………….. 3,000 3 ……………………………….. 2,300 4 ……………………………….. 1...

Q: A major college textbook publisher has an existing finance textbook. The

A major college textbook publisher has an existing finance textbook. The publisher is debating whether to produce an “essentialized” version, meaning a shorter (and lower-priced) book. What are some o...

Q: What is the IRR of the following set of cash flows?

What is the IRR of the following set of cash flows? Year ………………………….. Cash Flow 0 ……………………………….. −$18,700 1 ……………………………………… 9,400 2 …………………………………… 10,400 3 ……………………………………… 6,500