Finance Final Math

The stock of Wiley united has a beta of 0.92. The market risk premium is 8.4% and the risk free rate is 3.2%. What is the expected return on this stock?

.032 + .92(.084)= .1093%

Fiddler's Movie Stores stock has a risk premium of 9.6% while the inflation rate is 4.1% and the risk free rate is 3.9%. What is the expected rate on this stock

.039 + .096= .135 13.5%

A firm has sales of $1.2 million, profit margin of 5%, and a dividend payout ratio of 25%. How much will be added to RE next year is sales increased by 6%

1,200,000 x .06= 72,000 + 1,200,000= 1,272,000 1,272,000 x .05= 63,600 x .25= 15900 63,600-15,900= 47,700

The 7.5% PS of Home Town Brewers is selling for $45 a share. What is the firm's cost of PS if the tax rate is 35% and per value per share $100

100/45= 2.22 x .075=16.67%

You own a portfolio that is invested as follows: $11,400 of Stock A, $8,800 of Stock B, $14,900 of Stock C, and $3,200 of Stock D. What is the portfolio weight of Stock C?

11,400 + 8,800 + 14,900 + 3,200= 38,300 14,900/38,300= .389

A stock has a beta value of 1.86 the expected return on the market is 14.72 and the risk free rate is 4.65. What must the expected return on this stock be?

4.65 + 1.86(14.72-4.65)= 23.38

Traditional Bank has an issue of PS with $4.80 stated dividend that just sold for $80 a share what is the bank's cost of PS?

4.80/80= .06 6%

You own a portfolio that is invested 38% in Stock A, 43% in stock C, and the remainder in Stock C. The expected returns on these stocks are 10.9%, 15.4% and 9.1% respectively. What is the expected return on the portfolio

A .38 x .109 = .04142 B .43 x .154 = .06622 C .19 x .091 = .01729 =.12498 12.49%

BHS Inc determines that sales will rise from $300,000 to $500,000 next year. Assets are 70% of sales and liabilities are 30% of sales. BHS has a 10% profit margin and a 40% dividend payout ratio. What is the level of required new funds

A 200,000 x .7= -140,000 L 200,000 x .3= 60,000 NI 500,000 x.1 = 50,000 Div 500,000 x .4= -20,000 =-50,000

Healthy Snack Inc. Has a target capital structure of 55% CS 5% PS, and 40% debt. Its cost of equity is 14.3%, that cost of PS is 8.9% and the pretax cost of debt is 8.1% What is the company's WACC if the applicable tax rate is 35%

CS .55 x .143= .07865 PS .05 x .089= .00445 D .40 x .081(1-.35)= .02106 =.10416 10.42%

Western Electric has 23,000 of shares of CS outstanding of a price per share of $57 and a rate of return of 14.2%. The firm has 6,000 shares of 7% PS outstanding of a price of $48 per share. The PS has per value of $100. The outstanding debt has a total face value of $350,000 and currently sells for 102% of fare. the yield to maturity on the debt is 8.49% What is the firm's weighted average cost of capital if the tax rate is 34%

CS 23,000x57=1,311,000x.67x.142= .09514 PS 6,000x48=288,000x.147x.1458(100/48 x .07 =.1458)=.02143 D 350,000 x .183 x .056034 (.0849(1-.34)= .01025 .12682 12.68

How much is required in external financing if first-stage pro foma statements indicate $1 million in net income, $300,000 in dividends and $900,000 increase in total assets?

NI= +1,000,000 D= -300,000 A= -900,000 =-200,000

Noah's Landing stock is expected to produce the following returns given the various state of the economy. What is the expected return on this stock

state probability ROR Recession .3 x -.27= -.081 Normal .65 x .16= .104 Boom .05 x .35= .0175 =.0404 4.05%