Calculate the cost of the equity capital to the firm

Assignment Help Econometrics
Reference no: EM13186761

The MacBurger Company a chain of fast food restaurants, expects to earn $200 million after taxes for the current year. The company has a policy of paying out half of its net after-tax income to the holders of the company's 100 million shares of common stock. A share of the common stock of the company currently sells for eight times current earnings. Management and outside analysis expect the growth rate of earnings and dividends for the company to be 7.5 percent per year. Calculate the cost of the equity capital to this firm.

Reference no: EM13186761

Questions Cloud

What is a reasonable choice for the system and surroundings : Supposed you have a beaker of water that is being heated on a hot plate. If you are studying the amount of heat that is requred to change the water temperature by a certin amount. What is a reasonable choice for the system and surroundings?
What is the value of the marginal product of labor : The market price of the product is $10 per unit and the market wage rate is $8. Labor employed 4, total product 17 labor employed 5, total product 20 labor employed 6, total product 25 labor employed 7, total product 28 labor employed 8, total produc..
Examining crime scenes for the presence of washed-away blood : The chemical 5-amino-2,3-dihydro-1,4-phthalazinedione... better known as luminol, is used by forensic scientists in analyzing crime scenes for the presence of washed-away blood.
What are the different price points : Movies are distributed in a variety of forms, not just first run theatrical presentations. What other ways are movies distributed. What are the different price points. Using this information, draw a fully labeled graph of the market for movies in ..
Calculate the cost of the equity capital to the firm : The MacBurger Company a chain of fast food restaurants, expects to earn $200 million after taxes for the current year. The company has a policy of paying out half of its net after-tax income to the holders of the company's 100 million shares of c..
State and make a solution of tribasic sodium phosphate : A scientist wants to make a solution of tribasic sodium phosphate, Na3PO4, for a laboratory experiment. How many grams of Na3PO4 will be needed to produce 300mL of a solution
What is the source of the asymmetric information : Describe an adverse selection problem your company is facing. What is the source of the asymmetric information. Who is the less informed party. What transactions are not being consummated as a result of the information. Could you (or do you) u..
Compute the percentage of ammonium ion : the total elute from the column was diluted to 250 mL and a 50 mL aliquot was titrated with 11.35 mL of 0.10359 M sodium hydroxide. Calculate the percentage of ammonium ion in the sample.
What is the rationale behind the minimax regret rule : What is the rationale behind the minimax regret rule What are some less formal and precise mehtods of dealing with uncertainty. When are these useful. How does the adverse selection problem arise in the credit-card market. To what complaint does ..

Reviews

Write a Review

Econometrics Questions & Answers

  What will be the depreciation charges

if the cost basis for a macrs 5-year property is $100000 and the equipment is sold for $20000 after 5 years of beneficial use, what will be the depreciation charges the 1st and 5th years and the book value at the end of the 5th year

  What is the marginal cost per bushel of apples

how many bushels of apples should the farmer produce? If the government imposes a tax on the sellers which results in the sellers receiving $1 less per bushel sold, what amount of apples should the farmer choose to produce?

  Explain steady rate

Matt Christpher is a 25 year old mechanical engineering and his salary next year will be $60,000.Matt expects that his salary will increase at a steady rate of 5%per year until his retirement at age 65.

  Determine an equation for electricity cost

Briefly describe your answer and clearly, showing any necessary computations. Westminster Corporation has had the following experience over the last five quarters:

  What percent chances are there for a recession

During a recession, the hotdog project will earn $12,000.00 and the Champaign project will lose $8,000.00. If the alternative is earning $3,000.00 on government Treasury bill (T-bill), what should the manager do? Why?

  Define unemployment in the cattle industry

Determine unemployment in the cattle Industry. Explain a current status of unemployment in the Cattle Industry.

  Discuss the role of federal reserve in economy

This answer give vital hints on why the Federal Reserve establish general and specific rates of interest. This explains the recent tools the Federal Reserve has used to influence the United States economy.

  Question about multiple regression

Assume that when using the multiple regression in the formula Y = b1X1 and b2X2 + E that X1 represents wages and X2 represents transportation expenses?

  What kind of expression is this?

Suppose the inverse demand for a product is Q = ?P 1/2 + 10. Write the expression for the demand curve, i.e., P = f(Q). What kind of expression is this?

  Economic advantages for the us speaker company boss

Determine the economic advantages or disadvantages, for the United States speaker company Bose, to start a distribution center in the Czech Republic?

  How much will be the retirement fund

If he invests $100 monthly, how much will be in the retirement fund in 25 years if it averages a return of 5.5% APR with monthly compounding. Another retirement fund offer 6% EAR with monthly compounding. What would the value of this be ..

  Determine the net after-tax cash flows

An auto-part manufacturing company is considering the purchase of an industrial robot to do spot welding, which is currently done by skilled labor. The initial coast of the robot is $250,000, and the annual labor savings are projected to be $140,0..

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