Calculate the following problems and provide an overall summary of how companies make financial decisions in no more than 700 words, based on your answers:

1. Stock Valuation: A stock has an initial price of $100 per share, paid a dividend of $2.00 per share during the year, and had an ending share price of $125. Compute the percentage total return, capital gains yield, and dividend yield.
2. Total Return: You bought a share of 4% preferred stock for $100 last year. The market price for your stock is now $120. What was your total return for last year?
3. CAPM: A stock has a beta of 1.20, the expected market rate of return is 12%, and a risk-free rate of 5 percent. What is the expected rate of return of the stock?
4. WACC: 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)?
5. Flotation Costs: Medina Corp. has a debt-equity ratio of .75. The company is considering a new plant that will cost $125 million to build. When the company issues new equity, it incurs a flotation cost of 10%. The flotation cost on new debt is 4%. What is the initial cost of the plant if the company raises all equity externally?

 

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1. We use many different types of risk management methodologies and tools. A part of the process involves identifying the threats to our system, generally by attackers who would harm our systems and data (assets). I’ve included a project that walks you through a simple threat modeling exercise, using STRIDE, which you will apply using a scenario, to understand the basic process. 1. Read the threat modeling article using STRIDE located at https://www.webtrends.com/blog/2015/04/threat-modeling-with-stride/ and complete a threat model and risk management plan2. Read the attached Project description. you will create a report for your “boss” identifying the threats to your systems/assets in the scenario, who the attackers are, how they will attack (using STRIDE), and will make recommendations for security controls (use your textbook, too).Threat Modeling with STRIDE Project.docx
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