Finance

1 . Johnston Corporation is growing at a constant rate of 6 percent per year . It has both common stock and non-participating stock outstanding . The cost of stock (rps ) is 8 percent . The par value of the stock is 120 , and the stock has a stated dividend of 10 percent of par . What is the market value of the stock 125 120 175 150 200

2 . Thames Inc 's most recent dividend was 2 .40 per share (i .e , D0 2 .40 . The dividend is expected to grow at a rate of 6 percent per

br year . The risk-free rate is 5 percent and the return on the market is 9 percent . If the company 's beta is 1 .3 , what is the price of the stock today 72 .14 57 .14 40 .00 68 .06 60 .57

3 . Rollins Corporation is estimating its WACC . Its target capital structure is 20 percent debt , 20 percent stock , and 60 percent common equity . Its bonds have a 12 percent coupon , paid semiannually , a current maturity of 20 years , and sell for 1 ,000 . The firm could sell at par 100 stock which pays a 12 percent annual dividend but flotation costs of 5 percent would be incurred . Rollins ' beta is 1 .2 , the risk-free rate is 10 percent , and the market risk premium is 5 percent . Rollins is a constant-growth firm which just paid a dividend of 2 .00 , sells for 27 .00 per share , and has a growth rate of 8 percent The firm 's policy is to use a risk premium of 4 percentage points when using the bond-yield-plus-risk-premium method to find rs . The firm 's marginal tax rate is 40 percent . What is the firm 's cost of common stock (rs ) using the DCF approach

13 .6

14 .1

16 .0

16 .6

16 .9

4 . Rollins Corporation is estimating its WACC . Its target capital structure is 20 percent debt , 20 percent stock , and 60 percent common equity . Its bonds have a 12 percent coupon , paid semiannually , a current maturity of 20 years , and sell for 1 ,000 . The firm could sell at par 100 stock which pays a 12 percent annual dividend but flotation costs of 5 percent would be incurred . Rollins ' beta is 1 .2 , the risk-free rate is 10 percent , and the market risk premium is 5 percent . Rollins is a constant-growth firm which just paid a dividend of 2 .00 , sells for 27 .00 per share , and has a growth rate of 8 percent The firm 's policy is to use a risk premium of 4 percentage points when using the bond-yield-plus-risk-premium method to find rs . The firm 's marginal tax rate is 40 percent . What is Rollins ' WACC

13 .6

14 .1

16 .0

16 .6

16 .9

5 . J . Ross and Sons Inc . has a target capital structure that calls for 40 percent debt , 10 percent stock , and 50 percent common equity . The firm 's current...