User Account

All Pages

Calculate likelihood of default for publicly

Assignment Help Finance Basics
Reference no: EM132444363

Select a company from the list of S & P 500 stock index. Use the company's Annual report to estimate Market value of Debt (Long term Debt). Estimate the company's beta and required return on equity using the CAPM. Finally estimate the firm overall cost of capital. Write your answer in word and uploaded to dropbox. Estimating market value of debt is next to impossible as most debts are not actively traded in the market. Furthermore, you know that some bonds are likely to get downgraded, others default, and recovery rate is fairly uncertain. Estimating market value of a firm's debt is very difficult if not impossible. As you know in estimating Weighted Average Cost of Capital, one needs to have market value as opposed to book vlaue. To remedy the above problem for estimating market value of debt use book value of short term debt one year and higher and then add 1/2 of book value of long term debt to arrive at market value of debt. This is used by KMV to calculate likelihood of default for publicly listed company. Please use 3M as the company

Reference no: EM132444363

Questions Cloud

What effect does this have on the equity accounts : What effect does this have on the equity accounts? What was last year's dividend per share?
What will the balance sheet look like once the dividends : What is the stock selling for today? What will it sell for tomorrow? What will the balance sheet look like once the dividends are paid?
Required rate of return for stock : If the required rate of return for this stock is 13 %, what should be the intrinsic value of the firm. (Show work)
What do the claim to have found out : How are the authors carrying out the task? Are their methods and comments appropriate and adequate to the task?How does this advance knowledge in the field?
Calculate likelihood of default for publicly : This is used by KMV to calculate likelihood of default for publicly listed company. Please use 3M as the company
What are the total variable costs for the year : Youth for America had annual total costs of $800,000 at a volume of 2,000 volunteers. The fixed costs for the year were $400,000.
What to the slave is the fourth of july : What to the Slave is the Fourth of July," Frederic Douglass uses his admiration of the principles set forth in The Declaration of Independence to criticize
What is the future value-present value-effective annual rate : 1. What is the future value of $2,400 in 17 years assuming an interest rate of 7.9% compounded compounded semiannually?
What is the value of a property that generates : Suppose you borrow $250,000 at 5 percent for 15 years with monthly payments, how much do you owe at the end of five years.

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd