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Calculating cost of equity, cost of retained earnings based on discounted cash flow, C A P M and Bond cost plus premium methods.
The carnings, dividends, and stock price of talukdar Technologies, Inc., are expected to grow at a rate of 7 percent per year in the future. Talukdar's common stock sells for $23 per share, its last dividend was $2.00, and the company will pay a dividend of $2.14 at the end of the current year. a. Using the discounted cash flow approach, what is this company's cost of retained earnings? b. If the firm's beta is 1.6, the risk-free rate is 9 percent, and the average return on the market is 13 percent, what will be the firm's cost of equity using the CAPM approach? c. If the firm's bonds earn a return of 12 percent, what will k, be, as calculated using the bond-yield-plus-risk-premium approach? (Hint: Use the midpoint of the risk premium range discussed in the text.) d. Based on the results of parts (a) through (c), what would you estimate Talukdar's cost of retained carnings to be?
The dealer can currently borrow $ 2,000 million through one- week repurchase agreements at an interest rate of 1.20 percent. Compute the dealer's expected carry income in each of the following scenarios. ( Hint: A spreadsheet can be most useful he..
Fully describe the difference between positive and negative rights, giving three examples other than those found in the text for each (the examples given in the book are: privacy, the rights to food, life, and health care).
Computation of operational and financial and combined leverage and They have 1 million shares of common stock outstanding and a tax rate at 40%
Why is the US$ acceptable in the US and in a number of other countries? In what circumstances would the US$ no longer be acceptable? Explain how banks create checkable deposits by issuing loans.
Find out the value of the firm's equity? What is the promised return on company's debt? Find out the value of the firm? How much would the company's debt be worth if there were no bankruptcy costs?
Jones Hardware had common stock of $9,500 and retained earnings of $3,800 at the beginning of the year. At the end of the year, the common stock balance is $9,600 and the retained earnings account balance is $4,200.
Essence of Skunk is considering a change in its credit policy to terms 3/10, net 30 to preserve its market share. How will this change in policy affect accounts receivable?
CAPM validity as well as possible situations which of the following situations is possible
Discuss the importance of calculating the value of real options in finance: namely option to delay, option to expand, and option to abandon.
What would be the impact on labor and capital markets of such a shift in tax policy? What is the likely differential incidence of substituting a payroll tax for an equal-yield corporate income tax?
he owner of Chips, etc. manufactures two kinds of chips: Lime and Vinegar. He has a limited value of the three ingredients used to produce these chips available for his next production run:
Your annual mortgage payment on your house is $50,000. It is a 30-year mortgage at 5.25% annually. How much did you borrow?
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