What is the expected interest rate, Financial Accounting

You are the Genesis accountant and have taken a class recently in financing. You agree to prepare a PowerPoint presentation of approximately 6-8 minutes using the examples and information below: 

1. Debt: Jones Industries borrows $600,000 for 10 years with an annual payment of $100,000. What is the expected interest rate (cost of debt)?

2. Internal common stock: Jones Industries has a beta of 1.39. The risk-free rate as measured by the rate on short-term US Treasury bill is 3 percent, and the expected return on the overall market is 12 percent. Determine the expected rate of return on Jones's stock (cost of equity). Here are the details:

Jones Total Assets

$2,000,000

Long- & short-term debt

$600,000

Common internal stock equity

$400,000

New common stock equity

$1,000,000

Total liabilities & equity

$2,000,000

Develop a 10-12-slide presentation in PowerPoint format. Perform your calculations in an Excel spreadsheet. Cut and paste the calculation into your presentation. Include speaker's notes to explain each point in detail.

 

 

Posted Date: 3/22/2013 3:57:05 AM | Location : United States







Related Discussions:- What is the expected interest rate, Assignment Help, Ask Question on What is the expected interest rate, Get Answer, Expert's Help, What is the expected interest rate Discussions

Write discussion on What is the expected interest rate
Your posts are moderated
Related Questions
Suppose the interest rate for a one-period bond is 4%. (a) What is the price of an asset paying (1,1,1) which means 1 after 1 period, 1 after 2 periods, and 1 after 3 periods.

EXPLIN THE PROCEDURE FOLLOWED IN GOVERMENT SYSTEM OF ACCOUNTING IN INDIA.

Q. Define about financial gearing? As financial gearing raise the burden of interest payments increases and earnings become more volatile. Since interest payments should be met

Jensen Company has the following situation: Sales Price: $40 per unit Variable Cost Per Unit: $25 per unit Fixed Costs: $20,000 Units Sold: 4,000 Jensen is considering lowering the


Prepare a master budget You have just been hired as a new management trainee by XYZ Limited, a distributor of earrings to various retail outlets located in shopping malls acro

Tyler Smith has worked in an upholstery shop for 10 years. Tyler's wages were $20,000. Lately, Tyler has been unhappy with the shop's owner. Convinced that he could run an upholste

A Company policy calls for keeping safety-stock equal to 25% the forecasted demand for that month.  The company currently has a work force of 12 people.  It takes a worker 3 hours

Both a call and a put currently are traded on stock XYZ; both have strike prices of $50 and expirations of 6 months.  What will be the profit to an investor who buys the call for $

Effect of Resolution The consequences of the resolution to wind up are: 1) The company must cease to carry on its business except so far as is necessary for the beneficial win