MCQ’s Stocks X and Y sell at the same price. Stock X has a required return…+calculations
three. Shares X and Y promote on the similar worth. Inventory X has a required return of 12% whereas Y's required return is 10%. Inventory X’s dividend is anticipated to develop at a relentless fee of 6% a 12 months, whereas Inventory Y’s dividend is anticipated to develop at a relentless fee of four%. If the market is in equilibrium in order that anticipated returns equal required returns, which of the next statements is CORRECT?One 12 months from now, Inventory X’s worth is anticipated to be increased than Inventory Y’s worth.Inventory X has a better dividend yield than Inventory Y.Inventory X has the upper anticipated year-end dividend.Inventory Y has a better capital positive factors yield.Inventory Y has a better dividend yield than Inventory X.four. Inventory A has a beta of 1.1 and Inventory B's beta is zero.9. The market danger premium is 6%, and the risk-free fee is 6.three%. Each shares have a relentless dividend development fee of seven%. If the market is in equilibrium, which of the next statements is CORRECT?Inventory B should have the upper required return.Inventory B’s dividend yield equals its anticipated dividend development fee.Inventory A should have a better inventory worth than Inventory B.Inventory A should have a better dividend yield than Inventory B.Inventory B may have the upper anticipated return18. To assist finance a serious growth, Smith Holdings offered a non-callable bond with 15 years to maturity. This bond has a 10.25% annual coupon, it sells at a worth of $1,zero25, and it has a par worth of $1,00zero. If LNCR’s tax fee is 40%, what after-tax element price of debt must be used within the CCC calculation?a. 5.11%b. 5.95%c. 5.37%d. 6.25%5.66%19. Jones corp. just lately paid a $three.29 dividend, the dividend is anticipated to develop at a relentless fee of 6.50% a 12 months, and the widespread inventory at the moment sells for $62.50 a share. The before-tax price of debt is 7.50%, and the tax fee is 40%. The goal capital construction consists of 40% debt and 60% widespread fairness. What's the company’s CCC if all fairness is from retained earnings?a. 9.80%b. 9.06%c. eight.70%d. eight.35%e. 9.42%20 ABC Corp’s stability sheet reveals a complete of $50 million long-term debt with a coupon fee of eight.00% and a yield to maturity of seven.00%. This debt at the moment has a market worth of $55 million. The stability sheet additionally reveals that that the corporate has 20 million shares of widespread inventory, and the e-book worth of the widespread fairness (widespread inventory plus retained earnings) is $65 million. The present inventory worth is $eight.25 per share; stockholders' required return is 10.00%; and the agency's tax fee is 40%. Based mostly on market worth weights, and assuming the agency is at the moment at its goal capital construction, what CCC ought to ABC Corp use to guage capital budgeting tasks?a. eight.55%b. 7.56%c. 7.26%d. eight.21%e. 7.88%21. Odyssey Healthcare (ODSY) employed you as a marketing consultant to assist estimate its price of capital. You might have been supplied with the next information. (1): yield on the firm’s bonds = 7.00% and the chance premium over its personal debt price = four.00%. (2) rRF = 5.00%, RPM = 6.00%, and b = 1.25. (three) D1 = $1.20; P0 = $35.00 and g = eight.00% (fixed). You have been requested to estimate the price of fairness based mostly on the three mostly used strategies after which to point the distinction between the best and lowest of those estimates. What's that distinction?1.13%2.34%1.88%2.58%1.50%