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Able, Baker, and Charlie are the only three stocks in an index. The stocks sell for $48, $400, and $100, respectively. If Able undergoes a 3-for-4 reverse stock split, what is the new divisor? (Do not round intermediate calculations. Round your answer to 5 decimal places.)
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The following three defense stocks are to be combined into a stock index in January 2013 (perhaps a portfolio manager believes these stocks are an appropriate benchmark for his or her performance). Assume the index is scaled by a factor of 10 million; that is, if the total value of all firms in the market is $5 billion, the index would be quoted as 500.
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Â
| Â |
Price |
| Â |
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| Â |
SharesÂ
(millions) |
 |
1/1/13 |
 |
1/1/14 |
 |
1/1/15 |
| Douglas McDonnell |
355 |
 |
$ |
86 |
 |
$ |
91 |
 |
$ |
103 |
| Dynamics General |
455 |
 |
 |
55 |
 |
 |
52 |
 |
 |
66 |
| International Rockwell |
270 |
 |
 |
84 |
 |
 |
73 |
 |
 |
87 |
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| a. |
Calculate the initial value of the index if a value-weighting scheme is used. (Round your answer to 2 decimal places.)
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| b. |
What is the rate of return on this index for the year ending December 31, 2013? For the year ending December 31, 2014? (Negative values should be indicated by a minus sign. Do not round intermediate calculations. Enter your answers as a percent rounded to 2 decimal places. Omit the "%" sign in your response.)
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Â
| Â |
 |
| 2013 return |
n/r   % |
| 2014 return |
n/r  % |
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JJ Industries will pay a regular dividend of $2.70 per share for each of the next four years. At the end of the four years, the company will also pay out a $63 per share liquidating dividend, and the company will cease operations. If the discount rate is 9 percent, what is the current value of the company’s stock? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)
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You are going to value Lauryn’s Doll Co. using the FCF model. After consulting various sources, you find that Lauryn has a reported equity beta of 1.6, a debt-to-equity ratio of .7, and a tax rate of 30 percent. Assume a risk-free rate of 6 percent and a market risk premium of 9 percent. Lauryn’s Doll Co. had EBIT last year of $54 million, which is net of a depreciation expense of $5.4 million. In addition, Lauryn made $6.75 million in capital expenditures and increased net working capital by $2.9 million. Assume her FCF is expected to grow at a rate of 3 percent into perpetuity. What is the value of the firm?(Do not round intermediate calculations. Enter your answer in millions rounded to 2 decimal places. Omit the "$" sign in your response.)
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Could I Industries just paid a dividend of $1.52 per share. The dividends are expected to grow at a 16 percent rate for the next 5 years and then level off to a 5 percent growth rate indefinitely. If the required return is 14 percent, what is the value of the stock today? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)
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Netscrape Communications does not currently pay a dividend. You expect the company to begin paying a $4.8 per share dividend in 14 years, and you expect dividends to grow perpetually at 6.3 percent per year thereafter. If the discount rate is 15 percent, how much is the stock currently worth? (Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)
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Suppose the dividends for the Seger Corporation over the past six years were $1.51, $1.59, $1.68, $1.76, $1.86, and $1.91, respectively. Compute the expected share price at the end of 2014 using the perpetual growth method. Assume the market risk premium is 12.0 percent, Treasury bills yield 4.1 percent, and the projected beta of the firm is .86.(Do not round intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)
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