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A stock sells for $30. The next dividend will be $6 per share. If the return on equity ROE is a constant 15% and the company reinvests 20% of earnings in the firm, what must be the opportunity cost of capital? (Do not round intermediate calculations.)
Cost of Capital %
Identify and discuss two reinburstment methods that the organization may utilize, and explain what risks those methods may or may not bring to the organization.
Do we always select those projects that have the highest return on investment? What other factors play into capital budgeting decisions? What incentive is there for a company to pay dividends? What signals does dividend policy provide to investors?
Assume that iwt has not yet made the distribution. What is iwt's intrinsic value of equity? what is its intrinsic per share stock price?
Calculate the expected return of your portfolio. Calculate the portfolio beta. Given the information above, plot the security market line on paper. Plot the shares from your portfolio on your graph.
markets are in equilibrium
Sally and Ed each own property with a fair market value less than the amount of the outstanding mortgage on the property and also less than the original cost basis. They each were able to convince the mortgage holder to reduce the principal amount on..
An interest rate is 13.34% per annum expressed with continuous compounding. What is the equivalent rate with semi annual compounding? (Margin of error: +/- 0.01%)
The beta of a portfolio of stocks is:
Huffman corporation construct a building at cost of $20 million. Average accumulated expenditures were $8 million, actual interest was $1,200,000, and avoidable interest was $100,000. If the salvage value is $1,600,000, and it useful life is 40 years..
Black Hill Inc. sells $100 million worth of 21-year to maturity 8.91% annual coupon bonds. The net proceeds (proceeds after flotation costs) are $988 for each $1,000 bond. What is the before-tax cost of capital for this debt financing?
For the given cash flows, suppose the firm uses the NPV decision rule. Year Cash Flow 0 –$ 153,000 1 78,000 2 67,000 3 49,000 Requirement 1: At a required return of 9 percent, what is the NPV of the project?
Suppose that the index model for stocks A and B is estimated from excess returns with the following results: RA = 2.0% + 0.4RM + eA RB = –1.8% + 0.9RM + eB σM = 15%; R-square A = 0.30; R-square B = 0.22 Break down the variance of each stock to the sy..
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