Find the cost of equity of company, Cost Accounting

Outdoor Travel Inc. needs to estimate the cost of capital for the evaluation of capital

expenditures. A typical project is financed with 25% debt-to-value ratio (i.e., D/(D+E) = 0.25). Travel

Anywhere Inc., a publicly traded firm in the same business as Outdoor Travel, is financed with 20% debtto-value ratio and has a Beta of 0.9. For both corporations, the cost of debt is 8% and the corporate tax rateis 35%. Assume that the risk free rate is 4% and the expected market risk premium is 7%.

a) Find the cost of equity of Outdoor Travel Inc.

b) Find the WACC for Outdoor Travel Inc.

Posted Date: 3/4/2013 7:28:54 AM | Location : United States







Related Discussions:- Find the cost of equity of company, Assignment Help, Ask Question on Find the cost of equity of company, Get Answer, Expert's Help, Find the cost of equity of company Discussions

Write discussion on Find the cost of equity of company
Your posts are moderated
Related Questions
using the high low method how do i calculate the costs that are expected when the output expected is out of the range given for example cost prdctn volume 110000

CMM is an internationally recognized standard for calculating the maturity of an organization's software development processes and has become the primary benchmark multinational co

Question The statements of comprehensive income for three entities for the year ended 30 September 2009 are presented below: SOT PB UV

Explanations on the correct fixation of selling price

What are the major arguments for absorption costing?

The gross earnings of the factory workers for Vargas Company during the month of January are $66,000. The employer's payroll taxes for the factory payroll are 8,000. The fringe ben


DEFINITION OF BUDGET As per the Institute of Cost & Management (ICMA), London, a BUDGET is 'a quantitative statement and / or financial, prepared and approved prior to a defin

F ixed Overhead Variance (FOV) Fixed overhead variance has been described by ICMA, London, as 'the variation between the standard cost of fixed overhead absorbed in the pro

Cal Farms reported a supplies expense of $2,000,000 a year. The supplies amount decreased by 200,000 during the year to an ending balance of $400,000. What was the cost of supplies