Assignment 1
QVC ASCâ€s 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 ASCâ€s 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 weekâ€s previous assignment, add two more tabs in which you answer/solve the following (be sure to label tabs accordingly):
1.What is QVC AMCâ€s 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
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