Calculate the company cost of equity capital

Assignment Help Accounting Basics
Reference no: EM131612630

Question - The following financial statement data pertains to Nivan, Inc., a manufacturer of Dress Shop's (dollar amounts in millions):

Total Assets - $145,782

Interest-Bearing Debt - $30,659

Average We-tax borrowing cost - 9.25%

Common Equity:             

Book Value - $22.515

Market Value - $60.843

Income Tax Rate - 42%

Market Equity Beta - 0.88

Market Premium - 8.5%

Risk-free interest rate - 2.4%

Required:

a. Calculate the company's cost of equity capital.

b. Calculate the weight on debt capital that should be used to determine Nivan Shop's weighted average cost of capital.

c. Calculate the weight on equity capital that should be used to determine Nivan Shop's weighted average cost of capital.

d. Calculate Nivan Shops weighted average cost of capital.

Reference no: EM131612630

Questions Cloud

Write a twenty fact summary of yoga as self transformation : Write a twenty fact summary of "Yoga As Self Transformation" by Joel Kramer.
What is the equation of the curve which has subtangent : In 1692, Johann Bernoulli was teaching the Marquis de l'Hopital calculus in Paris. Solve the following problem, which is similar to the one that they did.
Environment at vibram in spite of counterfeiters : How would you nurture the creative environment at Vibram in spite of counterfeite
Analyze how would you describe your communication style : And what made it hard? How would you describe your communication style? How would you describe your interviewee's communication style?
Calculate the company cost of equity capital : The following financial statement data pertains to Nivan, Inc., a manufacturer of Dress Shop's: Calculate the company's cost of equity capital
Explain the duties of the federal judicial branch : explain the duties of the federal judicial branch, and how this branch checks and balances the other two branches of the federal government
Find the mass of salt in the pool at time t : An aquarium pool has volume 2 · 106 liters. The pool initially contains pure fresh water. At t = 0 minutes, water containing 10 grams/liter of salt is poured.
Create a new gantt chart using the project management : Create a new Gantt chart using the project management software of your choice. Describing the activities and the justification/rationale for your estimates.
Research in the social sciences : What are the primary purposes of doing research in the social sciences?

Reviews

Write a Review

Accounting Basics Questions & Answers

  A company decides to switch from double-declining balance

a company decides to switch from double-declining balance method to that straight-line method of recording

  From past experience the company has learned that 20 of a

silver company makes a product that is very popular as a mothers day gift. thus peak sales occur in may of each year as

  Obtain a copy of a companys financial statements any

obtain a copy of a companys financial statements any company from the internet. find the reportopinion provided by the

  What is smalls portion of the net income

What is Small's portion of the net income? What is Big's portion of the net income? Make the entry for this allocation.

  Prepare a partial income statement and balance sheet

Prepare a partial income statement and balance sheet to indicate how the above information would be reported for financial statement purposes. Berstler Construction Company uses the completed-contract method.

  Calculating the perfectly competitive equilibrium

Demand and supply conditions in the perfectly com- petitive market for unskilled labor are as follows:

  Describe what is important to include in the contract

You have been hired to oversee a major systems development effort to purchase a new accounting software package. Describe what is important to include in the contract with the software vendor.

  Gloria company had no beginning work in process during the

gloria company had no beginning work in process. during the period 12000 units were completed and there were 1200 units

  Primary document of the fasb that establishes gaap

Provides guidance on how to account for new and unusual financial transactions that have the potential for creating diversity in financial reporting practices.

  What are total quick assets for the company

A company has a current ratio of 2.10, total liabilities of $197,350, long-term notes payable $91,350, What are total quick assets for the company

  Carr company produces a single product during the past year

carr company produces a single product. during the past year carr manufactured 25000 units and sold 20000 units.

  Modernize german accounting reflects

The Act of 2010 to modernize German accounting reflects both a willingness to change as well as to retain traditional German accounting practices. Do you agree with the preceding statement? Explain.

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