User Account

All Pages

Find how much is firm worth if risk-free rate five percent

Assignment Help Financial Accounting
Reference no: EM132762961

You are considering acquiring a firm that you believe can generate expected cash flows of $8,000 a year forever. However, you recognize that those cash flows are uncertain.

Problem 1: Suppose you believe that the beta of the firm is 0.5. How much is the firm worth if the risk-free rate is 5% and the expected market risk premium is 8%?

Reference no: EM132762961

Questions Cloud

What is the implied standard deviation of daily yield change : A mean historical change in daily yields of 0.0 percent what is the implied standard deviation of daily yield changes measured in basis points?
Find the total carbonate and noncarbonate hardness : The pH of the solution is 9. Use EW of CaCo3 = 50, EW of Ca 2+ = 20 and EW of Mg 2+ = 12.2. Find the (a) total, (b) carbonate, and (c)noncarbonate hardness.
How much is the depreciation expense : Deuce Company purchased a truck for $50,000 on January 2, 20X1. The asset has an expected salvage value of $5,000 at the end of its five-year useful life.
Compute the cost of capital for retained earnings : The current financing mix is P750,000 of common stock, P200,000 of preferred stock (P50 par) and P300,000 of debt. Compute cost of capital for retained earnings
Find how much is firm worth if risk-free rate five percent : You are considering acquiring a firm, How much is the firm worth if the risk-free rate is 5% and the expected market risk premium is 8%?
What conditions must be met before the allowance method : The allowance method of recognizing bad debt expense (as opposed to the direct write-off method) can be applied in more than one way.
Find what is nopat for the company for last year : The target is a classic manufacturing company from the Midwest. It is listed on the NYSE, What is NOPAT for the company for last year?
Do you think this was a fair sentence : He was sentenced to 38 months in prison and ordered to pay restitution totaling nearly $500,000. Do you think this was a fair sentence? Why or why not
How many different electronic geometries can it have : If the central atom in a molecule is sp3 hybridized, how many different electronic geometries can it have?

Reviews

Write a Review

Financial Accounting Questions & Answers

  What is the total debit to accounts receivable for the month

Credit card fees are 2.5%. Based on this information, Determine what is the total debit to Accounts Receivable for the month of June?

  Purchase of merchandise and payment of freight by mathis

Mathis Company and Reece Company use the perpetual inventory system. The following transactions occurred during the month of April: On April 1, Mathis purchased merchandise on account from Reece with credit terms of 2/10, n/30. The selling price of t..

  Wheels center (mmwc) provides two meals per day

Wheels Center (MMWC) provides two meals per day. The town of Millbridge pays MMWC $32 per week for each person a week. Each person received 14 meals for the week. MMWC services a maximum of 9,600 meals per day. It costs MMWC an average of $36,000 per..

  Calculation of material price and quantity variancesdiekow

calculation of material price and quantity variances.diekow productions manufacturing and sold 1000 production at 11000

  Approximate market value of the stock after the stock split

A corporation has issued 17,000 shares $50 par value common stock. The board of directors declares a 4-for-1 stock split when the market value of the stock is $185. What should be the approximate market value of the stock after the stock split?

  What would be the effect on the overall profit

Two products, IF and RI, emerge from a joint process. Product IF has been allocated $33,300 of the total joint costs of $54,000. A total of 2,800 units of product IF are produced from the joint process. Product IF can be sold at the split-off point f..

  What is the future value of cash flows at the end of year

RM12500 each year starting at the end of year one. What is the future value of these cash flows at the end of year five if the interest rate is 7 percent?

  Estimate of the company net operating income

Creswell Corporation's fixed monthly expenses are $29,000 and its contribution margin ratio is 56%. Assuming that the fixed monthly expenses do not change, what is the best estimate of the company's net operating income in a month when sales are $..

  Find the value of the constant monthly cash flow

Find the value of the constant monthly cash flow. An investment costing $65,000 has a rate of return 12.75 percent and generates a constant monthly

  How truck accout related accumulated depreciation account

Show how the Truck account and the related Accumulated Depreciation account would appear on the balance sheet on (a) December 31, 2000; (b) December 31, 2001.

  Prepare a 2 page newsletter that identifies and summarises

the regulatory environment for financial reporting you are a member of a large accounting firm which is responsible for

  External rate of return err for the cash flow

MARR of 12%, find the external rate of return ERR for the cash flow. With and without using Excel

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