Compute Ke and Kn under the following circumstances: (a) D1 = $5.00, P0 = $70, g

Question

Compute Ke and Kn under the following circumstances: (a) D1 = $5.00, P0 = $70, g = 8%, F = $7.00. (Round your intermediate and final answers to 2 decimal places. Omit the "%" sign in your response.) Ke ? Kn ? (b) D1 = $0.22, P0 = $28, g = 7%, F = $2.50. (Round your intermediate and final answers to 2 decimal places. Omit the "%" sign in your response.) Ke ? Kn ? (c) E1 (earnings at the end of period one) = $7, payout ratio equals 40 percent, P0 = $30, g = 6.0%, F = $2.20. (Round your intermediate and final answers to 2 decimal places. Omit the "%" sign in your response.) Ke ?% Kn ?% (d) D0 (dividend at the beginning of the first period) = $6, growth rate for dividends and earnings (g) = 7%, P0 = $60, F = $3. (Round your intermediate and final answers to 2 decimal places. Omit the "%" sign in your response.) Ke ?% Kn ?%

Explanation / Answer

a) Kn = (D1 / P-F ) + g = 5/(70-7) + 8% = 3.15 + 8 =11.15% Ke = (D1 / P ) + g = 5/(70) + 8% = 3.5 +8 = 11.5% b) Kn = (D1 / P-F ) + g = 0.22/(28-2.50) + 7% = 7.0561=7.06% Ke = (D1 / P ) + g = 0.22/(28) +7% = 0.062 +8 = 8.062%

Related Questions

Navigate

• Browse (All)
• Browse C
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.