What is the companys cost of equity capital

Assignment Help Financial Management
Reference no: EM13923867

Halestorm Corporation’s common stock has a beta of 1.15. Assume the risk-free rate is 5 percent and the expected return on the market is 12.5 percent. Required: What is the company’s cost of equity capital?

(Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Reference no: EM13923867

Questions Cloud

Aspects changed between the studio and independent systems : How, typically, is a movie financed, and why are today’s movies so expensive to make? How are movies marketed and distributed? Have these aspects changed between the studio and independent systems?
Section of the business requirements document : Document all revisions made to the written project plan in the Document Control section of the business requirements document from Project Deliverable 2: Business Requirement.
About the target debt-equity ratio : Benjamin Manufacturing has a target debt-equity ratio of .64. Its cost of equity is 13.1 percent, and its cost of debt is 8.1 percent. Required: If the tax rate is 34 percent, what is the company’s WACC?
What is the accounting break-even level of sales : Dime a Dozen Diamonds makes synthetic diamonds by treating carbon. Each diamond can be sold for $160. The materials cost for a standard diamond is $60. The fixed costs incurred each year for factory upkeep and administrative expenses are $218,000. Wh..
What is the companys cost of equity capital : Halestorm Corporation’s common stock has a beta of 1.15. Assume the risk-free rate is 5 percent and the expected return on the market is 12.5 percent. Required: What is the company’s cost of equity capital?
Calculate the six-month horizon return for each bond : Calculate the six-month horizon return (in percent) for each bond, if the actual EBR bond price equals 105.55 and the actual CRR bond price equals 104.15 at the end of six months.
Rate of return on investment for all proposals : If your company requires a 15% Rate of Return on Investment for all proposals, do the numbers suggest that trade credit should be extended to these new customers?  Explain.
Cost of common equity-what would be the cost of new equity : Cost of Common Equity with Flotation Ballack Co.’s common stock currently sells for $35.75 per share. The growth rate is a constant 11.2%, and the company has an expected dividend yield of 2%. The expected long-run dividend payout ratio is 30%, and t..
Decides to undertake capital expansion financed by new debt : A firm with a normalized pretax income of $40 million, 25% tax rate, and a Total Debt/Total Capital ratio of 30%, decides to undertake a capital expansion financed by new debt. How would your answer change if the debt was unsecured? Specifically, wha..

Reviews

Write a Review

Financial Management Questions & Answers

  Information provided prepare the following operating budgets

Based on the information provided prepare the following operating budgets for 2015: Sales, Production, Direct Material, Direct Labor, Manufacturing Overhead, Ending Inventory, Cost of Goods Sold, Selling, General and Administrative Budgets, and a Bud..

  Mature manufacturing firm-reduce the payout

Antiques R Us is a mature manufacturing firm. The company just paid a dividend of $12.15, but management expects to reduce the payout by 6 percent per year indefinitely. If you require a return of 10 percent on this stock, what will you pay for a sha..

  A project that provides a constant annual cash flow

A project that provides a constant annual cash flow of $1,930 for eight years costs $7,700 today. Calculate the NPV at an 8% discount rate. Note: NPV = sum of the present values of all (positive and negative) cash flows

  Describe the operating cycle and the cash cycle

Explain the connection between a firm’s accounting-based profitability and its cash cycle? Describe the operating cycle and the cash cycle. What are the differences?

  Receivables investment-what are the days sales outstanding

McDowell Industries sells on terms of 3/10, net 25. Total sales for the year are $1,561,000; 40% of the customers pay on the 10th day and take discounts, while the other 60% pay, on average, 74 days after their purchases. Assume 365 days in year for ..

  Compounded continuously maturity

What are the prices of a call option and a put option with the following characteristics? Stock price = $73 Exercise price = $70 Risk-free rate of return = 4%, compounded continuously Maturity = 8 months Standard deviation = 49% per year.

  What was boyds profit or loss from this contract

Boyd Company sold a futures contract (one) on Treasury bonds that specified a price of 93-00. When the position was closed out, the price of the Treasury bond futures contract was 94-20. Did interest rates increase or decrease? How do you know? What ..

  What is the yield to maturity for the investment

Air products and Chemicals sold $125 million of notes in Nov. of 2003 with a December 1. 2010, maturity date. The bonds were sold at a discount of $99.721 per $100 with a coupon rate of 4.125%. Assume that bonds with a face value if $10,000 were purc..

  Discuss the implication of correlation coefficient

Please draw the efficient frontiers and discuss the relevant implication under the following assumptions: (a) Risk free assets are possible and short sale is not allowed; (b) Risk free assets are impossible and short sale is not allowed. Please discu..

  Average does it take the firm to sell an inventory item

Middleton's has sales for the year of $311,400, cost of goods sold equal to 74 percent of sales, and an average inventory of $42,800. The profit margin is 6 percent and the tax rate is 34 percent. How many days on average does it take the firm to sel..

  Money invested in telemetry medical instruments

You have been employed by Telemetry Medical Instruments (TMI) for seven years and participate in their 401 (k) plan by having 5% of your paycheck invested in the plan. What does prudent investment management suggest that you do about risk?

  The value chain and strategic cost analysis

Clarion Products raises trees, cuts the trees into logs, and processes the logs into paper. Clarion Products sells the paper to a distributor, who then sells the paper to printers. Compute the profits of each stage of the value chain. Show amounts in..

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd