week 4

Content

Met

Partially Met

Not Met

Comments:

Calculated the problems and provided an overall summary of how companies make financial decisions in no more than 700 words, based on the answers.

Stock Valuation. A stock has an initial price of $100 per share, paid a dividend of $2.00 per share during the year, and had an ending share price of $125. Compute the percentage total return, capital gains yield, and dividend yield.

Total Return. You bought a share of 4 percent preferred stock for $100 last year. The market price for your stock is now $120. What was your total return for last year?

CAPM. A stock has a beta of 1.20 the expected market rate of return is 12% and a risk-free rate of 5 percent. What is the expected rate of return of the stock?

WACC. The Corporation has a targeted capital structure of 80% common stock and 20% debt. The cost of equity is 12% and the cost of debt is 7%. The tax rate is 30%. What is the company’s weighted average cost of capital (WACC)?

Flotation Costs. Medina Corp. has a debt–equity ratio of .75. The company is considering a new plant that will cost $125 million to build. When the company issues new equity, it incurs a flotation cost of 10 percent. The flotation cost on new debt is 4 percent. What is the initial cost of the plant if the company raises all equity externally?

Total Available

Total Earned

85

#/85

Writing Guidelines

Met

Partially Met

Not Met

Comments:

The paper—including tables and graphs, headings, title page, and reference page—is consistent with APA formatting guidelines and meets course-level requirements.

Intellectual property is recognized with in-text citations and a reference page.

Paragraph and sentence transitions are present, logical, and maintain the flow throughout the paper.

Sentences are complete, clear, and concise.

Rules of grammar and usage are followed including spelling and punctuation.

Total Available

Total Earned

35

#/35

Assignment Total

#

120

#/120

Additional comments: