What is expected return of hd stock after this transaction

Assignment Help Financial Management

Reference no: EM131965221

Home Depot (HD) has a current market capitalization of 193.45$ billion and a beta of 0.4. HD currently has the risk free debt as well. Suppose HD issues a new risk free debt 59.73$ billion with a 5% yield plus 5$ billion cash to repurchase its stocks. The current market return is 13%. Assume perfect capital markets.

1) What is the beta of HD stock after this capital restructure?

2) What is the expected return of HD stock after this transaction?

Reference no: EM131965221

Questions Cloud

Calculate the value of an asset : You are currently making annual payments to a local bank of $1, 200 per year. Your loan with the bank has a remaining life of 5 years.

Identify the specific components of an institution : Every country in the world is constructed around the same set of institutional frameworks that differ only in how governments manage them.

How much money should you borrow to create the leverage : How much money should you borrow to create the leverage on your own? Assume you can borrow funds at 12 percent interest.

Discuss about the potential threats to us businesses : Take on the role of an advance research team for an organization exploring the opening of an office in Asia.

What is expected return of hd stock after this transaction : What is the beta of HD stock after this capital restructure? What is the expected return of HD stock after this transaction?

Design and production of a product : 49309 Quality Planning and Analysis - aim of providing students a practical case where they could apply the various quality (planning and analysis) tools

Construct the income statement for given year : Construct the Income Statement for 2016. What is the Net Income? What was NOPAT for 2016? What caused the difference between net income and NOPAT?

What is the after tax cost of debt for firm : If the the current price of the bonds is $1,090.58, what is the after tax cost of debt for this firm?

How much interest will you earn in the second year : how much interest will you earn in the first year? how much interest will you earn in the second year?

User Account

All Pages