WEEK 5 HW CORP FIN 4 SHOW YOUR CALCULATIONS FOR 1720 You hav

WEEK 5 HW CORP FIN 4 SHOW YOUR CALCULATIONS FOR #17-#20.

You have the option of performing calculations manually or with the use a financial calculator or spreadsheet. Either way, you must specify what is being calculated to earn credit:

17. Enrite Gas recently paid a $4.75 annual dividend on its common stock, which is expected to increase at an average rate of 3.5% per year. If the stock is currently trading for $39.33 per share, what is its market rate of return?

18. Town Bagel common stock sells for $65 a share and pays an annual dividend that increases by 4% annually. The market rate of return on this stock is 14%. What is the amount of the last dividend paid?

19. Erie Health Care common stock offers an expected total return of 9.5%. The last annual dividend was $2.10 a share and dividends are expected to increase at a constant 3% percent per year. What is the dividend yield?

20. The preferred stock of AKA Enterprises pays an annual dividend of $8.50 and sells for $55.74 a share. What is the rate of return on this security?

NO SCREEN SHOTS OR IMAGES OF RESPONSE. PLEASE TYPE YOUR ANSWER OR UPLOAD DOCUMENT IF REQUIREMENTS MENTIONED ABOVE ARE NOT MET I WILL GIVE A NEGATIVE RATING

Solution

17. rate of return = 4.75*1.35/39.33 + 3.5% = 16.00%

18. 65 = dividend*1.04/(0.14 - 0.04)

dividend = 6.25

19. dividend yield = 9.5% - 3% = 6.50%

20. rate of return = 8.50/55.74 = 15.25%