Best estimate of the company cost of equity

Assignment Help Basic Statistics
Reference no: EM132027255

Stock currently sells for $68.25 per share and has a beta of .85. The market risk premium is 7.10 percent and the risk-free rate is 2.85 percent annually. A company just paid a dividend of $3.45 per share, which it has pledged to increase at an annual rate of 3.10 percent indefinitely. What is your best estimate of the company's cost of equity?

Reference no: EM132027255

Questions Cloud

What is the interest rate on the debt : The levered capital structure would have 11,950 shares of stock and $88,000 of debt. What is the interest rate on the debt? Ignore taxes.
What will be the value of the bank stock : What will be the value of The Bank's stock if it opts to pay US$8500 as total dividend each quarter?
What is the breakeven price of the equipment : Pappy's Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy's paid $120,000 for a marketing survey to determine.
What is the weighted average cost of capital : Cost of equity of 12.9%. aftertax cost of debt of 4.2%. Tax rate is 40%. if the company's debt-equity ratio is .89, what is the weighted average cost of capital
Best estimate of the company cost of equity : A company just paid a dividend of $3.45 per share, which it has pledged to increase at an annual rate of 3.10 percent indefinitely.
Calculate the payback period for the project : Pappy's Potato has come up with a new product, the Potato Pet (they are freeze-dried to last longer). Pappy's paid $137,000 for a marketing survey to determine.
Firm borrowing rate on debt : Calculate the firm's weighted average cost of capital where the firm's borrowing rate on debt is 7.9 percent, it faces a 34 percent tax rate
What is the expected return on loan : If the loan is defaulted, it expects to recover 50% of its money through the sale of its collateral. What is the expected return on this loan?
Find what will be the stock price one year from now : Ferrell Inc. recently reported net income of $8 million. It has 580,000 shares of common stock, which currently trades at $59 a share.

Reviews

Write a Review

Basic Statistics Questions & Answers

  Compute a z-test for a proportion

For each of the scenarios listed below, select the appropriate test and write the null and alternative hypotheses to be used in the test.

  What is the probability that the first ball

Assuming the ball selection is without replacement. What is the probability that the first ball is red and the second ball is also red?

  Formulating null and alternative hypothesis to test claim

Formulate an appropriate hypothesis test to examine at the 10% level of significance whether the manager's worries are justified.

  Perform a hydraulic assessment on newham creek

You are required to perform a hydraulic assessment on Newham Creek, a tributary for Bulimba Creek in Brisbane. The provided model includes basic data for surveyed and interpolated cross sections.

  Variance of the original recipe sample

(a) Find the difference between these sample means. (b) Find the variance of the original recipe sample. (c) Find the variance of the new recipe sample.

  What is the estimated regression equation perform a t test

given below are seven observations collected in a regression study on two variables x independent variable and y

  What is probability that part can be assembled in minutes

What is the probability that the part can be assembled in 7 minutes or less? What is the probability that the part can be assembled between 3.5 and 7 minutes?

  Probability that at least one defective item turns up

A lot of n items contains k defectives, and m are selected randomly and inspected. How should the value of m be chosen so that the probability.

  Develop a null and alternative hypothesis

Develop a null and alternative hypothesis for the following situation: Chips Inc. claims that there are more than 25 chips in their bags

  Why is there a discrepancy between the two conclusions

If the researcher had examined 200 flies and counted exactly twice as many in each category - 118, 40, 22, 20 - what conclusion would he have reached

  What is the importance of the oc curve

What is the importance of the OC curve in the selection of sampling plans? Describe the impact of the sample size and the acceptance number on the OC curve.

  The firm wins one-third of the cases that go to trial if

a law firm takes cases on a contingent fee basis. if the case goes to trial the firm expects to earn 25000 as part of

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