Determine constant growth rate of stock and expected stock price. Also determine cost of capital and the best capital structure.
I need help with a Excel question. All explanations and answers will be used to help me learn.
Assignment 1
QVC ASCs current stock price is $24, and its last dividend was $1.89. NCU ASC has a very strong financial position so its required rate of return is 14%, and dividends are expected to grow at a constant rate in the future.
Create an Excel workbook with two tabs in which you answer/solve the following (be sure to label tabs accordingly):
1.What is the constant growth rate of QVC ASC stock?
2.Given the growth rate in #1, what is QVC ASCs expected stock price in five years?
Length: One Excel Workbook
Assignment 2
Instructions
QVC AMC received the following estimates for its costs of debt and equity financing at various capital structures:
|
Table 5. Example Data |
||
|
% Debt |
After-Tax Cost of Debt |
Cost of Equity |
|
0% |
– |
14% |
|
24% |
7.1% |
15% |
|
37% |
8.6% |
20% |
|
58% |
9.7% |
24% |
|
78% |
12.9% |
29% |
In the same Excel workbook from this weeks previous assignment, add two more tabs in which you answer/solve the following (be sure to label tabs accordingly):
1.What is QVC AMCs cost of capital at 58% debt?
2.What is the optimal capital structure for QVC AMC, i.e., the lowest cost of capital?
Length: One Excel Workbook
PROVIDE A BRIEF DESCRIPTION OF FORMULA’S USED FOR ALL CALCULATIONS