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FM Quiz 2 - Slot1
FM Quiz 2 - Slot1
Question 1
Hector Store'scommon stock currently sells for $78.50a share. The firm is expected to earn
$5.40 per share this year and to pay a year-end dividend of $3.60, and it finances with only
common equity.
a. If the company is expected to grow at 4.39%, what is the required rate of return by
investors(re)?
b. If Hector Store reinvestsretained earnings in projects whose average return is equal to
the stock's expected rate of return, what will be next year's EPS?
Question 2
Hanslow Ltd has Retained Earnings of $55 Milion. Its Target Capital Structure has 35% debt, 5%
Preferred Shares and 60% equity. Calculate the Retained Earnings breakeven point for Hanslow
Ltd. (The total amount of capital that can be raised before newstock must be issued)
Quiz Paper
FullName: Sablka
Student ERP WD No:
IBA Institute of Subject:
Business Administration Quiz #: Date
Karachi Class/Section:, 9386
Leadership and ldeas for Tomorow Teacher's Name:
36
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78S
82) S5 m
3S). deyt S7. PS
S5 - gal667 million.
Page # 1/2
Marks Signature of Instructor
Quiz Paper
FullName:Mehru amar
Student ERP J/D No: 24948
IBA Institute of Subject:
FiaeaT Maragehest tr
y Business Administration Quiz #: Date
28 SeLo23
Karachi Class/Section: 7386
leadership and ldeas or Tomorow Teacher's Name: Naumm Asn
Po $78So EPS-4s.yo
4.39/
re D1
Po
Ye 3.60 4.39:/ 764.
78-s0
e)
New camgs= elpie (amy: + (retaid eangs)
S.4o+ (S.yo-3.60)(8.9764-)
Nw caniqs= s-S61’
1
-$1. 6milion
breakereR
$1.64 milion wil be e byeakeven r
Hanslo td.