Q1Original stock price per shareDividend per shareEnding stock price per sharePercentage total returnTotal return=dividend paid+capital gain/(loss)Capital gain/(loss)=ending stock price-initial stock priceCapital gain/(loss)Total returnPercentage total return=total return/initial stock price X 100%percentage total returnCapital gains yield=capital gains/initial stock price X 100%Capital gains yieldDividend yield=dividend per share/ending share price X 100%Dividend yield$$$100.002.00125.00$$25.0027.0027%25%1.60%Q2. TOTAL RETURNPreferred Stock 4%Current market priceTotal return=4% interest+ capital gainsInterest=4%*initial preferred stock priceInterestCapital gain=current price-purchase priceCapital gainTotal return$ 100.00$ 120.00$4.00$ 20.00$ 24.00Q.3 Capital Asset Pricing Model (CAPM)Stock Betaexpected market rate of returnRisk free rateExpected rate of return of the stock=risk free rate + (expected market rate of return-risk free rate) x stock bExpected rate of return of the stock = 5%+1.2 (12%-5%)Q.3 Capital Asset Pricing Model (CAPM)Stock Betaexpected market rate of returnRisk free rateExpected rate of return of the stock=risk free rate + (expected market rate of return-risk free rate) x stock betaExpected rate of return of the stock = 5%+1.2 (12%-5%)1.212%5%e) x stock beta13.40%Q4. Weighted Average Cost of Capital (WACC)Targeted capital structureCommon stockDebtCost of equityCost of debt ...
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