Boehm Incorporated is expected to pay $1.50 per share dividend at the end of this year (i.e., D1= $1.50). The dividend is expected to grow at a constant rate of 6% a year. The required rate of return on the stock rs is 13%. What is the estimated value per share of Boehmâ€™s stock?

A company currently pays a dividend of $2 per share (D0 = $2). It is estimated that the companyâ€™s dividend will grow at a rate of 20% per year for the next 2 years, and then at a constant rate of 7% thereafter. The companyâ€™s stock has a beta of 1.2, the risk-free rate is 7.5%, and the market risk premium is 4%. What is your estimate of the stockâ€™s current price?

Investors require a 13% rate of return on Brooks Sisterâ€™s stock (rs = 13%).
a. What should the estimated value of Brookâ€™s stock be if the previous dividend were D0 - $3.00 and if investors expect dividends to grow at a constant annual rate of (1) -5%, (2) 0%, (3) 5%, and (4) 10%?
b. Using data from part a., what is the constant growth modelâ€™s estimated value for Brookâ€™s Sisterâ€™s stock if the required rate of return is 13% and the expected growth rate is (1) 13% or (2) 15%? Are these reasonable results? Explain.
c. Is it reasonable to expect that a constant growth stock would have g>rs?

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?

Booher Book Stores has a beta of 0.8. The 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 is last year was 15%. What is the estimated cost of common equity using the CAPM?

Shi Importerâ€™s balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shiâ€™s tax rate is 40%, rd = 6%, rps = 5.8%, and rs = 12%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC?

A companyâ€™s 6% coupon rate, semiannual payment, $1,000 par value bond that matures in 30 years sells at a price of $515.16. The companyâ€™s federal-plus-state tax rate is 40%. What is the firmâ€™s after-tax component cost of debt for purposes of calculating the WACC? (Base the answer on the nominal rate.)

Spencer Suppliesâ€™ stock is currently selling for $60 a share. The firm is expected to earn $5.40 a share this year and to pay a year-end dividend of $3.60.
a. If investors require a 9% return, what rate of growth must be expected for Spencer?
b. If Spencer reinvests earnings in projects with average returns equal to the stockâ€™s expected rate of return, then what will be next yearâ€™s EPS? (g = ROE x Retention ratio.)

Messman Manufacturing will issue common stock to the public for $30. The expected dividend and the growth in dividends are $3.00 per share and 5% respectively. If the flotation cost is 10% of the issueâ€™s gross proceeds, what is the cost of external equity, re?

Boehm Incorporated is expected to pay $1.50 per share dividend at t...