Risk-free rate-what is the cost of equity

Assignment Help Business Economics
Reference no: EM13796438

The risk-free rate on 30 year U.S. Treasury bonds is 3.25% and the expected rate of return on the overall stock market is 12%. The company has a beta of 1.6. What is the cost of equity?

Reference no: EM13796438

Questions Cloud

What is the wage for rice workers in the two economies : Vietnam employs 40 million tons of rice a year. World price os rice is $500 per ton. Vietnam employs 10 million people in rice production with each working an average of 1000 hours a year. Which economy, California or Vietnam, has an absolute advanta..
About this change in quantity demanded : The price elasticity of demand for Stork ice cream is -4. Suppose you're told that following a price increase, quantity demanded fell by 10 percent. What was the percentage change that brought about this change in quantity demanded?
Expected return from a new capital investment project : What would be the minimum expected return from a new capital investment project to satisfy the suppliers of the capital? Assume the applicable tax rate is 40%, interest on debt is 7%, flotation cost per share of preferred stock is $0.75, and flotatio..
Stock market-what is the cost of equity : Les argues that the 10 year note is a better risk free rate at 2%. He also argues that the stock market is too high and the expected return is really only 5%. Assume that he is correct. The company has a beta of 1.6. What is the cost of equity?
Risk-free rate-what is the cost of equity : The risk-free rate on 30 year U.S. Treasury bonds is 3.25% and the expected rate of return on the overall stock market is 12%. The company has a beta of 1.6. What is the cost of equity?
Calculate the cost of the companys retained earnings : The corporate treasurer of Rollinsford Company expects the company to grow at 3% in the future, and debt securities at 4% interest (tax rate = 35%) to be a cheaper option to finance the growth. The current market price per share of its common stock i..
Two firms are competing for output : Two firms are competing for output. Leader firm market demand is P=1200-Q and other firm demand is Q2=400-0.5Q1. Marginal cost for both is $200. How much is output for firm 1 and 2?
Contingency theories try to predict leadership efficiency : Contingency theories try to predict leadership efficiency. Common sense would tell us that not all traits or behaviors of leaders are positively related to effectiveness all of the time. Instead, whether a leader behavior is effective will depend on ..
Narrowly diverse culture is always desirable in organization : A narrowly diverse culture is always desirable in organizations. The chain of command outlines the planned configuration of positions, job duties, and the lines of authority among different parts of the organization. Task-oriented behavior involves c..

Reviews

Write a Review

Business Economics Questions & Answers

  How many cameras will camco produce

The marginal cost of the In Focus division for making the lenses is given by the equation MCl = 0.30 + 0.0004Ql. Each camera requires one lens. How many cameras will Camco produce and what price will be charged for each?

  The case of the unequal opportunity

In The Case of the Unequal Opportunity, the companys workplace equity policy is clear. In your opinion, which paradigm does the company use to manage diversity

  Economy in a recessionary or inflationary gap

Find Equilibrium GDP (Y). If potential GDP is 1950, is the economy in a recessionary or inflationary gap. Suppose that the MPC, falls to 0.75, so C = 0.85DI. Find Equilibrium GDP.

  Calculate both seperatly and show which one is better option

A company has to decide weather to lease or buy a crane for 20 Years, please calculate both seperatly and show which one is the better option.

  Calculate output-price-total revenue and total profit

Calculate output, price, total revenue and total profit at revenue maximizing activity level and n at profit maximizing level.

  Federal reserve system control the nations money supply

Should the Federal Reserve System control the nation's money supply? Defend your position using economic principles.

  Assume an urban clusters income i is given by the function

assume an urban clusters income i is given by the function i4n-0.05n2 where n denotes the clusters population in

  Countrys maximum consumption of lattes-pizzas per day

"Suppose that a worker in Larztopia can produce either 8 lattes or 2 pizzas per day, while a worker in Whiteland can produce 4 lattes or 8 pizzas per day. Each nation has 100 workers. Also suppose that each country completely specializes in producing..

  Respond to the following criticism using the criteria below

respond to the following criticism using the criteria below criticismfunding for health care has become a standard

  Identify the time series characteristics explain

Provide the time series plot. Identify the time series characteristics. Explain. Assuming no cyclical pattern, provide the best regression model for each data series. Run the regression model using E-views. Explain the validity of the model.

  To reduce her personal carbon footprint

To reduce her personal carbon footprint, Zooey is buying a new hybrid. She has negotiated a price of $21,900 and will trade in her old car for $2350. She will put another $850 with it and borrow the remainder at 6% interest compounded monthly for 4 y..

  How should the federal reserve react if they desire to bring

How should the federal reserve react if they desire to bring inflation down to 3% Wren will they achieve that goal? (Hint: maintain plenty of decimal places.)

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