Betas for the two divisions have been determined to be beta

Assignment Help Financial Management

Reference no: EM131059664

Colt manufacturing has two divisions: 1) pistols; and 2) rifles. betas for the two divisions have been determined to be beta (pistol) = 0.4 and beta (rifle) = 0.9. the current risk - free rate of return is 4.5%, and the expected market rate of return is 9.5%. the after-tax cost of debt for colt is 3%. the pistol division's financial proportions are 45.0% debt and 55.0% equity, and the rifle division's are 55.0% debt and 45.0% equity

Reference no: EM131059664

Questions Cloud

How would you advise him regarding the deductions : How would you advise him regarding the deductions and expenses he may be able to claim? Make a recommendation regarding how these expenses should be treated to maximize his deductions. Be specific with your recommendation.

When the firm might begin paying dividends is not known : McCaffrey’s Inc. has never paid a dividend, and when the firm might begin paying dividends is not known. Its current free cash flow (FCF) is $100,000, and this FCF is expected to grow at a constant 7% rate. Its long-term debt is $1,000,000, but it ha..

Chemical energy decrease : A battery with an emf of 10.5 V and internal resistance of 1.01 Ω carries a positive current of 0.520 A from its negative terminal to its positive terminal. (c) By how much will the chemical energy decrease? (e) At what rate is chemical energy use..

Write essay on something of personal importance to you : Write a short essay on something of personal importance to you

Betas for the two divisions have been determined to be beta : Colt manufacturing has two divisions: 1) pistols; and 2) rifles. betas for the two divisions have been determined to be beta (pistol) = 0.4 and beta (rifle) = 0.9. the current risk - free rate of return is 4.5%, and the expected market rate of return..

Discuss the various types of grants listed below : Although the term grant writing is often used in a generic manner, there are a number of specific grant types that grant writers in criminal justice and related fields may pursue. Please discuss the various types of grants listed below, and provid..

What is net foreign exchange bought : Citibank holds $42 million in foreign exchange assets and $39 million in foreign exchange liabilities. Citibank also conducted foreign currency trading activity in which it bought $7 million in foreign exchange contracts and sold $14 million in forei..

Light source of two different wavelengths : A Young's double-slit experiment contains a light source of two different wavelengths: 632.8 nm and 515 nm. If we assume each color only interferes with itself, (a) are there points where both maximums overlap?

Estimated annual operating cash flow from this project : A company is considering a 5-year project to open a new product line. A new machine with an installed cost of $110,000 would be required to manufacture their new product, which is estimated to produce sales of $60,000 in new revenues each year. If st..

User Account

All Pages