What is the estimated unlevered cost of equity

Assignment Help Financial Management
Reference no: EM131059723

Hilltop Paving has a levered equity cost of capital of 14.92 percent. The debt-to-value ratio is .4, the tax rate is 34 percent, and the pretax cost of debt is 7.2 percent. What is the estimated unlevered cost of equity?

12.08%

13.06%

12.56%

10.97%

Reference no: EM131059723

Questions Cloud

Maximum an investor should pay for the common stock of firm : What would be the maximum an investor should pay for the common stock of a firm that has a 2.5% annual growth rate and has just paid a dividend of $1.50 per year? The next dividend will be paid in exactly 1 year. The required rate of return is 12.5%...
How to optimize performance parameters of internal combustio : How to Optimize performance parameters of Internal combustion Engine using Artificial Neural Networks?
Calculate the present value of the ongoing payment : The way to calculate the present value of the ongoing payment depends on whether it's a part of a different set of ongoing payments.
Expenditure on advertising per year in millions : In the following regression output using data on 40 ferns In Ine textile Industry, the variable PROFIT is measured in millions of dollars per year. ADV Is expenditure on advertising per year in millions. and RD Is expenditure on research ar4 develo..
What is the estimated unlevered cost of equity : Hilltop Paving has a levered equity cost of capital of 14.92 percent. The debt-to-value ratio is .4, the tax rate is 34 percent, and the pretax cost of debt is 7.2 percent. What is the estimated unlevered cost of equity?
Planning to save for retirement-withdrawal period : You are planning to save for retirement over the next 25 years. To do this, you will invest $760 a month in a stock account and $360 a month in a bond account. The return of the stock account is expected to be 9.6 percent, and the bond account will p..
Prepare the journal entry to record the issuance of the bond : Prepare the journal entry to record the accrual of interest and the amortization of the premium on December 31, 2011. Prepare the journal entry to record the payment of interest and the amortization of the premium on July 1, 2012, assuming no accru..
Index of refraction in water : If the index of refraction in water is about nwater = 1.33 which substance, when shaped into a lens, would have the most focusing power, Acryliteor water? Explain.
Gain per share and breakeven price at expiration of options : Jeff believes that Microsoft stock will move significantly in either direction with the release of the next version of Windows. Jeff wants to design a strangle strategy to take advantage of the possible move in the stock price. Should Jeff embark on ..

Reviews

Write a Review

 

Financial Management Questions & Answers

  What should current rate be on two-year treasury securities

Liquidity Premium Hypothesis One-year Treasury bills currently earn 5.85 percent. You expect that one year from now, one-year Treasury bill rates will increase to 6.10 percent. The liquidity premium on two-year securities is .110 percent. If the liqu..

  What gives rise to the currency exposure at aifs

What gives rise to the currency exposure at AIFS and what would happen if Archer-Lock and Tabaczynski did not hedge at all?

  Determine the present value of the bonds cash flows

The Garcia Company’s bonds have a face value of $1,000, will mature in 10 years, and carry a coupon rate of 16 percent. Assume interest payments are made semiannually. a. Determine the present value of the bond’s cash flows if the required rate of re..

  Two contracts for the exclusive right to manufacture

A manufacturer offers an inventor the choice of two contracts for the exclusive right to manufacture and market the inventor’s patented design. Plan 1 calls for an immediate single payment of $261464. Plan 2 calls for an annual payment of $14790 plus..

  Project with for organization-common or preferred stock

In weighted average cost of capital (WACC), what is more expensive to finance a project with for an organization - common stock or preferred stock?

  What would her monthly payment be

Oprah Winfrey has closed on a 42-acre estate near Santa Barbara, California, for $53,000,000. If Oprah puts 20% down and finances at 7% for 30 years, what would her monthly payment be?

  Identify appropriate industry specific ratios

Discuss the disadvantages of ratio analysis. You must use questions 1 to 3 and examples from your workplace to substantiate your discussion

  Calculating cost of equity

Stock in CDB Industries has a beta of .90. The market risk premium is 7 percent, and T-bills are currently yielding 3.5 percent. CDBs most recent dividend was $1.80 per share, and dividends are expected to grow at a 5 percent annual rate indefinitely..

  What is the average amount of receivables

Snider Industries sells on terms of 3/10, net 20. Total sales for the year are $1,487,500. Thirty percent of the customers pay on the 10th day and take discounts; the other 70% pay, on average, 38 days after their purchases. What are the day’s sales ..

  Weighted average implied by the two outstanding debt issues

Filer Manufacturing has 8.9 million shares of common stock outstanding. The current share price is $59, and the book value per share is $4. Filer Manufacturing also has two bond issues outstanding. Suppose the company’s stock has a beta of 1.2. The r..

  Coupon rate and semiannual coupons is trading

Suppose a ten-year, $1,000 bond with an 8.9% coupon rate and semiannual coupons is trading for $1,034.46. What is the bond's yield to maturity (expressed as an APR with semiannual compounding)? If the bond's yield to maturity change to 9.2% APR, what..

  A college administrator wants to study the average age

Find a 95% confidence interval for the mean age of all first semester college dropouts. Interpret your results in part (a) inwords.

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