What is the new wacc if take the average of the capm

Assignment Help Financial Accounting
Reference no: EM132889490

Question 1: Sigma Company has the following capital structure: 45% debt, 15% preferred stock and 40% common stock. The firm's 12-year 7% annual coupon bonds is currently trading at $717.49 The firm's 10% annual dividend perpetual preferred stock with a par value of $100 is trading at $71.43. Their common stock is trading at $50. Their next dividend is expected to be $5.00. The growth rate is forecasted at 10%.. The risk-free rate is 8%, the beta of the stock is 1.5 and the market risk premium (Rm - Rf) is 12%. What is the new WACC if you take the average of the CAPM and dividend growth models to estimate the cost of equity. Assume a tax rate of 35%

Reference no: EM132889490

Questions Cloud

Why is the applicant home address important to credit card : Do you think date of birth is important information to credit card company? Why is the applicant's home address important to the credit card
Advise the minister on any benefits from these countries : Demonstrate their knowledge and understanding of a chosen topic by applying international trade theories and concepts - improve the comparative advantage
Explain how power distance can effect society : Explain How power distance can effect society? Develop relationship between power distance and organizational effectiveness? Explain
Identify and report inadequacies in existing risk controls : What is a process to identify and report inadequacies in existing risk controls. How would I consider the hierarchy of control and legislative requirements in t
What is the new wacc if take the average of the capm : What is the new WACC if you take the average of the CAPM and dividend growth models to estimate the cost of equity. Assume a tax rate of 35%
Disadvantages of incremental policy change regarding policy : What do you see as the major advantages or disadvantages of incremental policy change regarding this policy?
Determine the price elasticity of demand of a commodity : 1. Outline four factors that would lead to a rightward shift in the demand curve
Determine the correct balance that should be reported : Determine the correct balance that should be reported in the bank book and make a bank reconciliation statement reconciling the amended balance
Core stages of entrepreneurship : Identify which one (the choice is yours) of the following four core stages of entrepreneurship you believe is the most challenging to overcome.

Reviews

Write a Review

Financial Accounting Questions & Answers

  Financial statement analysis and preparation

Financial Statement Analysis and Preparation

  Shareholder of a company

Describe the ways that a person can become a shareholder of a company. Why Wal-Mart would split its stock?

  Financial and accounting principles

An understanding of financial and accounting principles can be a valuable tool for managers. While not all managers will find themselves calculating financial ratios or preparing annual financial data.

  Prepare a statement of cash flow using the direct method

Prepare a Statement of Cash Flow using the Direct Method and Prepare the Operations section of the Statement of Cash Flow using the Indirect Method.

  Financial accounting assignment

This assignment has one case study and two question apart from case study. Questions related to document Liquidation question and Company financial statements question - Torquay Limited

  Prepare general journal entries for goela

Prepare general journal entries for Goela Ltd

  Principles of financial accounting

Prepare the journal entry to record the acquisition of the assets.

  Prepare general journal entries to record the transactions

Prepare general journal entries to record the transactions, assuming use of the periodic inventory system

  Global reporting initiative

Compare the view espoused by the economist Milton Friedman about the social responsibilities of business with the views express by Stigler.

  Explain the iasb conceptual frameworks

Explain the IASB Conceptual Framework's perspective of users and their decisions.

  Determine the company''s financial statements

T he focus of the report is to determine the extent to which you are comfortable relying on the financial statements as presented by management .

  Computation of free cash flow

Computation of Free Cash Flow

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