Loading...

Messages

Proposals

Stuck in your homework and missing deadline? Get urgent help in $10/Page with 24 hours deadline

Get Urgent Writing Help In Your Essays, Assignments, Homeworks, Dissertation, Thesis Or Coursework & Achieve A+ Grades.

Privacy Guaranteed - 100% Plagiarism Free Writing - Free Turnitin Report - Professional And Experienced Writers - 24/7 Online Support

How to find capital gains yield

13/11/2021 Client: muhammad11 Deadline: 2 Day

Calculation - Rate of Return for Stocks and Bonds

FIN/571

Running head: CALCULATION - RATE OF RETURN FOR STOCKS AND BONDS

1

CALCULATION - RATE OF RETURN FOR STOCKS AND BONDS

4

Calculation - Rate of Return for Stocks and Bonds

Stock Valuation

1. “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.”

1a) Percentage total return = (Dividends paid + Change in market value) / Initial stock price

Percentage total return = ($2 + ($125-$100))/ $100 = $27 / $100 = 0.27 or 27%

1b) Capital gains yield = (Ending share price – Initial share price)/Initial share price

Capital gains yield = ($125 - $100) / $100 = $25 / $100 = .25 or 25%

1c) Dividend yield = Dividend per share earn during the year / the initial stock price

Dividend yield = $2.00 / $100 = 0.02 or 2%

Total Return

2. “You bought a share of 4 percent preferred stock for $100 last year. The market price for your stock is now $120. What was your total return for last year?”

Total return = (Dividend paid + Change in market value) / Initial stock price

Total return = ((4% x $100) + ($120 - $100)) / $100 = ($4 + $20) / $100 = 0.24 or 24%

CAPM

3. “A stock of 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?”

Expected rate of return = Risk-free rate + (Beta x (Expected market rate – Risk-free rate))

Expected rate of return = 5% + (1.20 x (12% - 5%) = 5% + (1.20 x 7%) = 5% + 8.4%

Expected rate of return = 13.4%

WACC

4. “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)?”

WACC = (Weight of Equity x Cost of Equity x (1 – Tax rate)) + (Weight of Debt x Cost of debt)

WACC = (80% x 12% x (1 – 30%)) + (20% x 7%) = (6.72% + 1.4%) = 8.12%

FLOTATION COSTS

5. “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 percent. The flotation cost on new debt is 4 percent. What is the initial cost of the plant if the company raises all equity externally?”

% of Debt = 0.75 / (1+0.75) = 42.86%

% of Equity = 100% - % of Debt = 100% - 42.86% = 57.14%

Plant funded through debt: 42.86% x $125 million = $53,575,000

Flotation cost on Debt = $53,575,000 x 4% = $2,143,000

Plant funded through equity: 57.14% x $125 million = $71,425,000

Flotation cost on equity = $71,425,000 x 10% = $7,142,500

Total Flotation cost = $2,143,000 + $7,142,500 = $9,285,5000

Initial Cost = $125,000,000 + $9,285,5000 = $134,285,500

Homework is Completed By:

Writer Writer Name Amount Client Comments & Rating
Instant Homework Helper

ONLINE

Instant Homework Helper

$36

She helped me in last minute in a very reasonable price. She is a lifesaver, I got A+ grade in my homework, I will surely hire her again for my next assignments, Thumbs Up!

Order & Get This Solution Within 3 Hours in $25/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 3 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 6 Hours in $20/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 6 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

Order & Get This Solution Within 12 Hours in $15/Page

Custom Original Solution And Get A+ Grades

  • 100% Plagiarism Free
  • Proper APA/MLA/Harvard Referencing
  • Delivery in 12 Hours After Placing Order
  • Free Turnitin Report
  • Unlimited Revisions
  • Privacy Guaranteed

6 writers have sent their proposals to do this homework:

Best Coursework Help
Assignment Guru
Exam Attempter
Accounting Homework Help
Top Quality Assignments
Peter O.
Writer Writer Name Offer Chat
Best Coursework Help

ONLINE

Best Coursework Help

Being a Ph.D. in the Business field, I have been doing academic writing for the past 7 years and have a good command over writing research papers, essay, dissertations and all kinds of academic writing and proofreading.

$38 Chat With Writer
Assignment Guru

ONLINE

Assignment Guru

As an experienced writer, I have extensive experience in business writing, report writing, business profile writing, writing business reports and business plans for my clients.

$17 Chat With Writer
Exam Attempter

ONLINE

Exam Attempter

I have read your project description carefully and you will get plagiarism free writing according to your requirements. Thank You

$34 Chat With Writer
Accounting Homework Help

ONLINE

Accounting Homework Help

I reckon that I can perfectly carry this project for you! I am a research writer and have been writing academic papers, business reports, plans, literature review, reports and others for the past 1 decade.

$29 Chat With Writer
Top Quality Assignments

ONLINE

Top Quality Assignments

I have assisted scholars, business persons, startups, entrepreneurs, marketers, managers etc in their, pitches, presentations, market research, business plans etc.

$24 Chat With Writer
Peter O.

ONLINE

Peter O.

As an experienced writer, I have extensive experience in business writing, report writing, business profile writing, writing business reports and business plans for my clients.

$17 Chat With Writer

Let our expert academic writers to help you in achieving a+ grades in your homework, assignment, quiz or exam.

Similar Homework Questions

Where did trevor noah grow up - Response Paper - Mini Research Paper - A grandfather pendulum clock keeps perfect time - Create a blog post... part 1 rough draft. - Reader writer problem using semaphore with writer priority - Consumer discretionary sector analysis - Write a 250-word response to the following question and 100 words response for the sample answer - Nought's had all's spent - Why Should You Hire a Professional Ghost Book Writer? - Nursing Research - West coast transit case study - Need sunday - Poetry should ride the bus - Fast cat results tool - Biology - Queen mab speech translation - ________ is the tendency for supervisors to base judgments on readily obtainable information. - Nappy change procedure in childcare - Calcium content in milk experiment - Change management specialists often work __________. - Todaiji temple ap art history - Sdl threat modeling tool examples - SOCW 6361 Week 10 - Post Responses - African grey parrot wikipedia - Geographic reasoning student pre assessment - TLASGN4 - Document b samuel drowne answers - Quantitative criteria for strategy evaluation - A clash of kings hbo tie in edition difference - Transitional devices quiz with answers - What does gattaca code for - Econ graph microsoft excel - Heat of solution lab report answers - Assignment #1: Research Specialty Care Paper .Rubric attached - How to greet customers at mcdonald's - Principles of comparative politics 3rd edition ebook - Everyday series evangelism earley and wheeler - Another brick in the wall pink floyd meaning - 2007 in roman numerals - Collapsible coiler reeler wire spooler - What is the best case time complexity of insertion sort - Kings canyon national park geology - English Composition I - Guidelines for Writing Your Letter to the Admissions Committee - Prince of prussia hotel - Figurative language for sadness - Paradigm Analysis Paper - Workday strayer - Power sonic ps-1270 f1 charger - Microsoft's search case study summary - Dulux white duck half exterior - 40a edgcumbe terrace rosslyn park - Conflict Managment Dis 3 - What to pack for ncs phase 1 - Sickinger spinning wheels for sale - Comp. 1 Reading Assignment due 11:59pm 9/23 - Capsim drift rates - Alltextbooks.com - Health education east midlands - How to make cyclohexane with model kit - BIOLOGY - Software testing lab exercises - Help - Civilization - What are the building blocks of carbohydrates - Midterm reflection assignment - Key stakeholders in the criminal justice system - Mormugao port vessel position - Awakenings movie assignment answer key - 150 words - Crane flow of fluids 410 pdf - How to read a climate graph - Starbucks debt financing - How to do dupont analysis - Diversity reflection essay - Whs performance reporting matrix - Solving ac circuits with complex numbers - Andrews lane primary school - Watch silas marner movie online - What is brabantio's reaction to othello's marriage to desdemona - Ob gyn soap note template - The futile search for stability guided reading answers - Convert pcap to netflow - How to write a historical context paper - Red bull stratos marketing case study - Describe the behaviour of giles corey act 3 - Trilastin reviews before and after - Sinorama gold 8 deck plan - 6 act structure tv - Julius lothar meyer periodic table contribution - Mackillop family services broadmeadows - Telstra apply for phone - Tina jones shadow health musculoskeletal - Assmnt - Add points to subcard - 1000 meters is how many kilometers - Disney parks and resorts competitors - Prose in english literature - Discussion redox reaction lab report