UNIT 4: TEXTBOOK PROBLEMS
CHAPTER 10: PROBLEM 1
Beginning Stock Price $73
Ending Stock Price $82
Dividend $1.20
Percentage Total Return =
CHAPTER 10: PROBLEM 12
Stock Return the past 5 years -18.35% 14.72% 28.47% 6.48% 16.81%
Holding Period Return for the Stock = (Note: Subtract your answer by 1 to obtain the correct percentage answer.)
CHAPTER 10: PROBLEM 14
Price of Preferred Stock Last Year $94.83
Current Price of Preferred Stock $96.20
Preferred Stock Dividend 4.20%
Face Value of Preferred Stock $100
Total Return =
CHAPTER 10: PROBLEM 15
Stock Price 3 Months Ago $41.75
Current Stock Price $44.07
First calculate the total return for the 3 months
Then calculate the APR by multiplying the answer in cell B50 by 4
EAR (Effective Annual Rate) =
CHAPTER 11: PROBLEM 2
Stock A $3,900
Stock B $5,700
Total Value of the Portfolio $9,600
Expected Return on Stock A 9.50%
Expected Return on Stock B 15.20%
Expected Return on the Portfolio =
CHAPTER 11: PROBLEM 12
Beta 0.85
Expected Return on the Market 11.50%
Risk-Free Rate 3.40%
Expected Return on the Stock =
CHAPTER 12: PROBLEM 1
Beta 1.21
Risk-Free Rate 3.50%
Expected Return on the Market 11%
Cost of Equity =
CHAPTER 12: PROBLEM 5
Common Stock weight 70%
Debt weight 30%
Cost of Equity 13%
Cost of Debt 6%
Tax Rate 35%
WACC =
Resources
Website icon Unit 4 Textbook Problems Scoring Guide.
MS Excel icon Unit 4: Textbook Problems Template.
Presentation icon MBA6016 Course Alignment Map.
Website icon Capella Graduate Online Writing Center – APA Style and Formatting.
This assignment helps you develop the skills to master the following course competency:
Apply the theories, models, and practices of finance to the financial management of the firm.
To review how all your activities help you achieve the competencies in the course, and ultimately, your overall program outcomes, revisit
the MBA6016 Course Alignment Map.
Activity Instruction
To enhance your understanding of financial concepts, please complete the following problems in your Corporate Finance textbook.
Chapter 10, problem 1 (page 310).
Chapter 10, problem 12 (page 311).
Chapter 10, problem 14 (page 311).
Chapter 10, problem 15 (page 311).
Chapter 11, problem 2 (page 348).
Chapter 11, problem 12 (page 350).
Chapter 12, problem 1 (page 384).
Chapter 12, problem 5 (page 384).
Assignment Submission
You are required to use the textbook problems template in the Resources to complete the problems. This Excel document contains unique
details and cells specific to the problems that you must use to derive your solutions. Where numeric solutions are expected, provide full
detail of the process used to reach the solution using Excel. Where analysis is expected, use information from the textbook to inform your
analysis, not replace it, incorporating creativity, critical thinking, and real-life perspectives. Cite all resource materials used in
your analysis, using proper APA format.
A thorough, professional presentation of your analysis and results is an important consideration. Enhance your presentation skills by
using applicable tools such as tables, graphs, diagrams, and commentary as appropriate in all assignments in this course.
Submit your completed problems for grading and instructor feedback. Solutions for the problems will be posted the subsequent week.
Chapter 10 problem 1: 1. Calculating Returns Suppose a stock had an initial price of $73 per share, paid a dividend of $1.20 per share
during the year, and had an ending share price of $82. Compute the percentage total return.
Chapter 10 problem 12: Holding Period Return A stock has had returns of 2 18.35 percent, 14.72 percent, 28.47 percent, 6.48 percent, and
16.81 percent over the past five years, respectively. What was the holding period return for the stock?
Chapter 10 problem 14: Calculating Returns You bought a share of 4.2 percent preferred stock for $94.83 last year. The market price for
your stock is now $96.20. What is your total return for last year?
Chapter 10 problem 15: Calculating Returns You bought a stock three months ago for $41.75 per share. The stock paid no dividends. The
current share price is $44.07. What is the APR of your investment? The EAR?
Chapter 11 problem 2: Portfolio Expected Return You own a portfolio that has $3,900 invested in Stock A and $5,700 invested in Stock B. If
the expected returns on these stocks are 9.5 percent and 15.2 percent, respectively, what is the expected return on the portfolio?
chapter 11 problem 12: Using CAPM A stock has a beta of .85, the expected return on the market is 11.5 percent, and the risk-free rate is
3.4 percent. What must the expected return on this stock be?
chapter 12 problem 1: Calculating Cost of Equity The Dybvig Corporation’s common stock has a beta of 1.21. If the risk-free rate is 3.5
percent and the expected return on the market is 11 percent, what is Dybvig’s cost of equity capital?
chapter 12 problem 5: Calculating WACC Mullineaux Corporation has a target capital structure of 70 percent common stock and 30 percent
debt. Its cost of equity is 13 percent, and the cost of debt is 6 percent. The relevant tax rate is 35 percent. What is Mullineaux’s WACC?
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