Reference no: EM131965920
1. Assume that the equity beta for JJ is 1.02. The Yield on 10-year treasuries is 4%, and that the market risk premium for the year is 9%. What would be the cost of equity for JJ? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05"
2. If the dividends for JJ firm are the same for common and preferred stock, and the price for common stock is $17. What would be the cost of equity for JJ firm? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05"
3. Using the results of Problems 5 and 6. If you are to be conservative in your approach, What is the cost of Equity that you will use in estimating the WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05"
4. The expected return on CA s equity is 2.5%, and the firm has a yield to maturity on its debt of 3%. Debt accounts for 15%, common equity for 80% and preferred equity for 5% of CA s total market value. If its tax rate is 40%, and the cost of preferred equity is 45%, What is this firm s WACC? Express your answers in strictly numerical terms. For example, if the answer is 5%, write 0.05"
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