User Account

All Pages

Calculate the cost of equity using the ddm method

Assignment Help Finance Basics
Reference no: EM131429119

Calculating the Cost of Equity Floyd Industries stock has a beta of 1.15. The company just paid a dividend of $.85, and the dividends are expected to grow at 4.5 percent per year. The expected return on the market is 11 percent, and Treasury bills are yielding 3.9 percent. The most recent stock price for the company is $76.

a. Calculate the cost of equity using the DDM method.

b. Calculate the cost of equity using the SML method.

c. Why do you think your estimates in (a) and (b) are so different?

Reference no: EM131429119

Questions Cloud

Explain eight basic facts about the global financial system : Identify and explain the eight basic facts about the global financial system? Give a summarize with examples how transaction costs affect financial intermediaries? Your example should include the profile and corporate structure
Effective annual interest rate : a. What is your effective annual interest rate (an opportunity cost) on the revolving credit arrangement if your firm does not use it during the year?
Determine the mass of the disk : A uniform disk of radius r = 120 mm is welded at its center to two elastic rods of equal length with fixed ends at A and B.
Definition of the four concepts of the nursing metaparadigm : Identify and include a definition of the four concepts of the nursing metaparadigm (common components or concepts in all nursing theories): person, nursing, health, and environment, with reference to the Nurse Practitioner professional practice.E..
Calculate the cost of equity using the ddm method : a. Calculate the cost of equity using the DDM method. b. Calculate the cost of equity using the SML method. c. Why do you think your estimates in (a) and (b) are so different?
What you have discovered and what solution you propose : ENGLISH 2950 - Define the problem and its context and offer a concise solution, all within no more than two pages and Moon Professional Memo.
Rationale behind borrowing the entire amount : Suppose your company needs $35 million to build a new assembly line. Your target debt-equity ratio is .75. The flotation cost for new equity is 6 percent, but the flotation cost for debt is only 2 percent. Your boss has decided to fund the project..
Find the maximum velocity of end a of the rod : 6-lb slender rod is suspended from a steel wire which is known to have a torsional spring constant K = 1.5 ft. lb/rad. If the rod is rotated through 180° about the vertical and released
Consider the ethical implication of disclosure-nondisclosure : You are working as an advanced practice nurse at a community health clinic. You make an error when prescribing a drug to a patient. You do not think the patient would know that you made the error, and it certainly was not intentional. Cons..

Reviews

Write a Review

Finance Basics Questions & Answers

  Select a global fortune 500 company it cannot be one you

select a global fortune 500 company it cannot be one you work for that operates in the united states and in other

  Convertible debt-project evaluation and bankruptcy

What are the benefits and costs of placing the financially troubled company Bankruptcy proceeding? Is this a legitimate and ethical vehicle for management to employ for the benefit of company's stakeholders?

  Estimate the firms current stock price to be

which is also expected return on new investment. Its earnings are expected to grow forever at a rate of 5.5% per year. If its next dividend is due in one year, what do you estimate the firms current stock price to be?

  What is the intrinsic value

The company's debt and preferred stock has a total market value of $25,000 and there are 1,000 outstanding shares of common stock. What is the (per-share) intrinsic value of the company's common stock?

  What is the companys return on investment

Milton Inc. generates annual revenue of $375,000,000 and incurs annual costs of $95,000,000. The initial investment amounts to $450,000,000. What is the company's return on investment?

  What will happen to the opportunity cost of capital

What will happen to the opportunity cost of capital if investors suddenly become especially conservative and less willing to bear investment risk?

  Construct an amortization schedule for the first three

construct an amortization schedule for the first three months and the final three months of payments for a 30-year 7

  Assume that the expectations hypothesis for interest rates

One-year T-bill rates are expected to steadily increase by 150 basis points per year over the next six years. Determine the required interest rate on a three-year T-bond and a six-year T-bond if the current one-year interest rate is 7.5%. Assume that..

  Create a function that returns the present value of a sum

Create a function that returns the present value of a sum. The function should take two parameters: Number of periods and Interest Rate.

  Accept or else reject the project under npv

Accept or else reject the Project under NPV and Profitability Index and What is the net present value of a project with the following cash flows and a required return of 12%

  What are the bid and ask prices in american terms

What are the bid and ask prices in American terms? Which currency is Citigroup buying at these prices and which currency is Citigroup selling?

  How would this change the average amount of time

This will increase the average wait time to 3.4 minutes for the remaining 4 lines. How would this change the average amount of time? Please show work for both answers.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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