Please show step by step work.,Chapter 7, problems7-1, 7-3, 7-5, 7-6, 7-16 (a,b),7-1,Thress Industries just paid a dividend of $1.50 a share. The dividend is expected to grow 5% a year for the next 3 years and then10% a year thereafter. What is the expected dividend per share for each of the next 5 years?,7-3, Woidtke Manufacturing’s stock currently sells for $20 a share. The stock just paid a dividend of $1.00 a share, and the dividend is expected to grow forever at a constant rate of 10% a year. What stock price is expected 1 year from now? What is the required rate of return on Woidtke‘s stock?,7-5, A company currently pays a dividend of $2 per share. It is estimated that the company’s dividend will grow at a rate of 20% per year for the next 2 years, then at a constant rate of 7% thereafter. The company’s stock has a beta of 1.2, the risk-free rate is 7.5%, and the market premium is 4%. What is your estimate of the stock’s current price?,7-6,A stock is trading at $80 per share. The stock is expected to have a year-end dividend of $4 per share, and it is expected to grow at some constant rate g throughout time. The stock’s required rate of return is 14%. If markets are efficient, what is your forecast of g?,7-16,The risk-free rate of return, rRF, is 11%; the required rate of return on the market, rM, is 14%; and Schuler Company’s stock has a beta coefficient of 1.5., • If the dividend expected during the coming year, D1, is $2.25, and if g is a constant 5%, then at what price should Schuler’s stock sell?, • Now suppose that the Federal Reserve Board increases the money supply, causing a falling in the risk-free rate to 9% and in rM to 12%? How would this affect the price of the stock?,? Chapter 9, problems 9-2, 9-4, 9-6, 9-8 ,9-2,LL Incorporated’s currently outstanding 11% coupon bonds have a yield to maturity of 8%. LL believes it could issue new bonds at par that would provide a similar yield to maturity. If its marginal tax rate is 35%, what is LL’s after-tax cost of debt?,9-4,Burnwood Tech plans to issue some $60 par preferred stock with a 6% dividend. A similar stock is selling on the market for $70. Burnwood must pay flotation costs of 5% of the issue price. What is the cost of the preferred stock?,9-6,Booher Book Stores has a beta of 0.8. The yield on a yield on a 3-month T-bill is 4% and the yield on a 10-year T-bond is 6%. The market risk premium is 5.5%, and the return on an average stock in the market last year was 15%. What is the estimated cost of common equity using CAPM?,9-8,David Ortiz Motors has a target capital structure of 40% debt and 60% equity. The yield to maturity on the company’s outstanding bonds is 9%, and the company’s tax rate is 40%. Ortiz’s CFO has calculated the company’s WACC as 9.96%. What is the company’s cost of equity capital?,
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