1st assignment is:
Answer all questions:
1. Explore the website of Yahoo Finance and pick up any topic of your interest related to finance then write ONE page report on the topic.
2. Visit the website AAII.com and then explore different tabs. See what info you found and then write PAGE AND HALF.
www.aaii.com
3. Discuss what is Amortization? What are Amortized Loans? Also find Amortization Calculator on the internet and report your findings as to what information it gave you.
REFERENCES ARE MANDATORY.
Hamilton Landscaping's dividend growth rate is expected to be 30% in the next year, drop to 15% from Year 1 to Year 2, and drop to a constant 5% for Year 2 and all subsequent years. Hamilton has just paid a dividend of $2.50 and its stock has a required return of 11%. | |||||||||
a. What is Hamilton's estimated stock price today? | |||||||||
D0 | $2.50 | ||||||||
rs | 11.0% | ||||||||
g0,1 | 30% | Short-run g; for Year 1 only. | |||||||
g1,2 | 15% | Short-run g; for Year 2 only. | |||||||
gL | 5% | Long-run g; for Year 3 and all following years. | |||||||
g | 30% | 15% | 5% | 5% | |||||
Year | 0 | 1 | 2 | 3 | |||||
Dividend | |||||||||
PV of dividends and PV of horizon value | |||||||||
= D2 (1+g) = D3 | |||||||||
= Horizon value = P2 = | |||||||||
= rs – gL | |||||||||
= P0 | |||||||||
a. What is Hamilton's estimated stock price for Year 1? | |||||||||
P1 | = | P2 | + | D2 | |||||
(1 + rs) | |||||||||
P1 | = | + | |||||||
P1 | = | ||||||||
b. If you bought the stock at Year 0, what your expected dividend yield and capital gains for the upcoming year? | |||||||||
1. Find the expected dividend yield. | |||||||||
Dividend yield = | D1 | / | P0 | ||||||
Dividend yield = | / | ||||||||
Dividend yield = | |||||||||
2. Find the expected capital gains yield. | |||||||||
Use the estimated price for Year 1, P1, to find the expected gain. | |||||||||
Cap. Gain yield= | (P1 – P0) | / | P0 | ||||||
Cap. Gain yield= | / | ||||||||
Cap. Gain yield= | |||||||||
Alternatively, the capital gains yield can be calculated by simply subtracting the dividend yield from the total expected return. | |||||||||
Cap. Gain yield= | Expected return | – | Dividend yield | ||||||
Cap. Gain yield= | – | ||||||||
Cap. Gain yield= | |||||||||
c. What your expected dividend yield and capital gains for the second year (from Year 1 to Year 2)? Why aren't these the same as for the first year? | |||||||||
1. Find the expected dividend yield. | |||||||||
Dividend yield = | D2 | / | P1 | ||||||
Dividend yield = | / | ||||||||
Dividend yield = | |||||||||
2. Find the expected capital gains yield. | |||||||||
Use the estimated price for Year 2, P2, to find the expected gain. | |||||||||
Cap. Gain yield= | (P2 – P1) | / | P1 | ||||||
Cap. Gain yield= | / | ||||||||
Cap. Gain yield= | |||||||||
Alternatively, the capital gains yield can be calculated by simply subtracting the dividend yield from the total expected return. | |||||||||
Cap. Gain yield= | Expected return | – | Dividend yield | ||||||
Cap. Gain yield= | – | ||||||||
Cap. Gain yield= | |||||||||
2nd assignment is:
I need you to write a brief summary of the important concepts learned from the file below:
Also use the file below for both assignments.