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# RATE OF RETURN FOR STOCKS AND BONDS

Document Type:Essay

Subject Area:Finance

Document 1

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.