mathxl.com 0 Assignments Take a Test Claudia Torres FINA3313 Fall 2017 (1) Claud
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mathxl.com 0 Assignments Take a Test Claudia Torres FINA3313 Fall 2017 (1) Claudia Torres | 12/14/17 11:54 PM Quiz: Practice Questions Chapter 7 (Module 3: Stock Valuation) Submit Quiz This Question: 1 pt 160117(5 complete) This Quiz: 17 pts possible Question Help Common stock value Zero growth Personal Finance Problem Kelsey Drums, Inc, is a well-established supplier of fine percussion instruments to orchestras all over the United States. The company's class A common stock has paid a dividend of S5 per share per year for the last 18 years. Management expects to continue to pay at that amount for the foreseeable future. Sally Talbot purchased 400 shares of Kelsey class A common 6 years ago at a time when the required rate o return for the stock was 13%, he wants to sell her shares today. The current required rate o return for the stock is 10%. How much total capital gain or loss will Sally have on her shares? The value of the stock when Sally purchased it was Sper share. (Round to the nearest cent.) The value of the stock if Sally sells her shares today is $per share. (Round to the nearest cent) The total capital gain or loss) Sally will have on her shares is $ (Round o the nearest dollar. Enter a positive number for a capital gain and a negative number for a s Enter your answer in each of the answer boxes.Explanation / Answer
1) value of stock at purchase= dividend/expected return
=5/13%=38.46
b)current share price=5/10%=50
c)Gain per share=50-38.46=11.54
total gain=11.54*400=4165
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