Log in
HomeTextbook Notes300,000US110,000

BUS 102 Chapter Notes - Chapter 6: Dividend Discount Model, Capital Asset Pricing Model

42 views3 pages
profmari
7 May 2023
School
Roxbury Community College
Department
Business
Course
BUS 102
Professor

For unlimited access to Textbook Notes, a Class+ subscription is required.

Document Summary

Calculate required rate of return for three stock using sml equation: Graphical representation of capital asset pricing model"s (capm) is recognized as the security market line (sml). Er = rf + [ rm rf ] * . Rm = market risk = a = 12% =12. 5: calculate fair value of three stocks using gordon growth model: Formula when growth rate of dividend is constant: D1 = next year dividend = a = rs 5. R = required rate of return = a = 11% G = growth rate of dividend = a = 4% =rs 57. 14: identify whether the stocks are undervalued or overvalued: Stock a is undervalued because its fair price is (rs. 71. 43) which is greater than its current market price which is (rs. It is available at lower rates on the market than it should be. 35. 29) which is less than its current price, so stock b is overvalued (rs.

Get access

Grade+
$40 USD/m
Billed monthly
Grade+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
10 Verified Answers
Class+
$30 USD/m
Billed monthly
Class+
Homework Help
Study Guides
Textbook Solutions
Class Notes
Textbook Notes
Booster Class
7 Verified Answers

Related Documents

FIN 300
Final Exam
Study Guide
FIN 300 Study Guide - Quiz Guide: Capital Asset Pricing Model, Risk-Free Interest Rate, Equity Premium Puzzle
viridianzebra871
FIN 3104 Lecture Notes - Lecture 7: Capital Asset Pricing Model, Risk-Free Interest Rate, Systematic Risk
lavenderreindeer584
FIN 260 Lecture Notes - Lecture 56: Capital Asset Pricing Model
oliveyellowjacket981

Related Questions

*************URGENT* please answer. Directions are there. Very urgent

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year, A total of 910,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, the income tax rate was 40 %, and the dividend per share of common stock was $ 0.75 last year and $ 0.40 this year. The market value of the company's common stock at the end of this year was $ 23.50. All of the company's sales are on account.

Required:
Compute the following financial data for this year:
 
1. Earnings per share. (Round your answer to 2 decimal places.)
2. Price-earnings ratio. (Round your intermediate calculations and final answer to 2 decimal places.)
3. Dividend payout ratio. (Round your intermediate calculations and final answer to 2 decimal places.)
4. Dividend yield ratio. (Round your intermediate calculations and final answer to 2 decimal places.)
5. Book value per share. (Round your answer to 2 decimal places.)
 
1. Earnings per share    
2. Price-earnings ratio    
3. Dividend payout ratio    %
4. Dividend yield ratio    %
5. Book value per share    
 

***VERY URGENT**** can somebody please solve the return on total assets. That is the only one I have wrong and 7.2 and 9.2 are both wrong. This is very urgent and due in the next hour. Please help me I will make sure to like the answer. I really need this answer very soon.

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue any new common stock during the year. A total of 830,000 shares of common stock were outstanding. The interest rate on the bond payable was 12%, the income tax rate was 40 %, and the dividend per share of common stock was $ 0.75 last year and $ 0.40 this year, The market value of the company's common stock at the end of this year was $ 20. All of the company's sales are on account.
 

Required:
Compute the following financial data for this year:
1. Gross margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
2. Net profit margin percentage. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
3. Return on total assets. (Round your percentage answer to 1 decimal place (i.e., 0.1234 should be entered as 12.3).)
4. Return on equity. (Round your percentage answer to 2 decimal places (i.e., 0.1234 should be entered as 12.34).)
 
1. Gross margin percentage 34.8  %
2. Net profit margin percentage 4.6  %
3. Return on total assets ________  %
4. Return on equity 11.25  %
 

**URGENT** please answer. Directions are there……

Comparative financial statements for Weller Corporation, a merchandising company, for the year ending December 31 appear below. The company did not issue ary new common stock during the year, A total of 600,000 shares of common stock were outstanding. The interest rate on the bond payable was 10%, the income tax rate was 40 %, and the dividend per share of common stock was $ 0.75 lost are and account. $ 0.40 this year. The market value of the company's common stock at the end of this year was $28. All of the company's sales are on account.

Required:
Compute the following financial data for this year:
1. Accounts receivable turnover. (Assume that all sales are on account.) (Round your answer to 2 decimal places.)
2. Average collection period. (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal places.)
3. Inventory turnover. (Round your answer to 2 decimal places.)
4. Average sale period. (Use 365 days in a year. Round your intermediate calculations and final answer to 2 decimal places.)
5. Operating Cycle. (Round your intermediate calculations and final answer to 2 decimal places.)
6. Total asset turnover. (Round your answer to 2 decimal places.)
 
1. Accounts receivable turnover.    
2. Average collection period.     days
3. Inventory turnover.    
4. Average sale period.     days
5. Operating Cycle.     days
6. Total asset turnover.