RATE OF RETURN FOR STOCKS AND BONDS

Compute the percentage total return, capital gains yield, and dividend yield. Capital Gains Yield = (End Price - Beg Price)/Beg Price Capital Gains Yield = (125 – 100)/100 =. 25 Dividend Yield = Dividends Paid/Beg Price = 2. 02 % Total Return = Capital Gains Yield + Dividend Yield =. 27 Total Return 2. The Corporation has a targeted capital structure of 80% common stock and 20% debt. The cost of equity is 12% and the cost of debt is 7%. The tax rate is 30%. What is the company's weighted average cost of capital (WACC)? WACC = (% equity*cost of equity) + (% debt*cost of debt*(1-tax rate)) WACC = (. 30) = WACC =. 92 = 135,869,565 Introduction The purpose of this paper is to permit an opportunity to compute the rate of return of equity and debt instruments. It allows the understanding of effects of dividends; capital gains; inflation rates; and the nominal rate of return influences valuation and costs.

Also, the assignment looks for concepts associated with CAPM, WACC, and Floatation Cost to comprehend the authority of debt and equity on the business' capital structure. Companies make financial decisions by value asset, investment decisions, and dividend policy. The value asset determines the worth of finances. The capital budget along with NPV and IRR was used for making decisions on individual investments (Westerfield, 2016). Investments should be accepted with the positive return and investment with negative returns should be avoided. Cost analysis results in choosing the correct discount rate. Weighted Average Cost of Capital is a metric for finance to measure the purchase of capital to a firm, and it comes increased as the rate of return and beta. Also, the WACC is utilized to give a discount rate for a project, because the cost of finance is a valid price tag to put on the investment.