Calculate the cost of equity capital using CAPM

Assignment Help Accounting Basics
Reference no: EM132717534

Questions -

Q1. Calculate the cost of equity capital using CAPM if the risk-free rate of interest is 5 per cent, the return on the market portfolio is 9 per cent, the beta of the firm's assets is .8 and the and beta of equity is 1.2. Provide your answer as a percentage to two decimal places (15.32% should be entered as 15.32). Do not enter the % sign.

Q2. Assume that A limited paid a dividend of 23.2 cents per share just recently. The shares currently sell for $10.9. You also estimate that the dividend will grow steadily at 2.1 % per year into the indefinite future. What is the cost of capital, ke for A limited? Answer as a percentage accurate to two decimal places (11.32% should be entered as 11.32). Do not enter the % sign.

Reference no: EM132717534

Questions Cloud

Digital preservation can be defined as the long-term : Digital preservation can be defined as the long-term, error-free storage of digital information, with means for retrieval and interpretation,
Systematic process of collecting information : A Needs Assessment refers to a systematic process of collecting information to help management teams make informed decisions to drive change,
Calculate the transaction price to be allocated : Calculate the transaction price to be allocated to the performance obligations of AllFuels Limited and prepare the journal entry to record the March 2020 sales
Limitations of blockchain and emerging concepts : Blockchain continues to be deployed into various businesses and industries.
Calculate the cost of equity capital using CAPM : Calculate the cost of equity capital using CAPM if the risk-free rate of interest is 5 per cent, the return on the market portfolio is 9 per cent
Find the minimum acceptable unit price for GEM : The only selling costs that would be associated with the order would be a shipping cost of $9.00 per unit. Find the minimum acceptable unit price for GEM
How much would Anne charge for a house : How much would Anne charge for a house with 3,300 square feet and 14 openings, based on high-low method, based on square footage
What are main difficulties in calculating cost of capital : What are the main difficulties in calculating cost of capital for diversified companies? Can diversification reduce all risk? Why or why not
What is the ending inventory balance at the end of the year : The firm uses the periodic system, and there are 20 units of the commodity on hand at the end of the year. What is the ending inventory balance at the end

Reviews

Write a Review

Accounting Basics Questions & Answers

  What is the gain or loss from disposal of plant

What is the gain/loss from disposal of property, plant and equipment in fiscal year 2020 if the sale price of the disposed assets is $2 (millions)?

  Prepare any necessary adjusting entries at december

A disgruntled employee is suing Moor Company. Legal advisers believe that the company will probably need to pay damages, but the amount cannot be reasonably.

  List the client tax relevant information

List the client's tax relevant information, such as age, marital status, number of dependents, income and retirement savings

  What proposals would you make for alternatives to

1. what proposals would you make for alternatives to punishments? would these alternatives work in your community?

  Luca company overapplied manufacturing overhead during 2006

1 at the end of the year manufacturing overhead has been overapplied. what occurred to create this situation? 2 luca

  The following were taken from the unadjusted trial balance

the following were taken from the unadjusted trial balance of orion co. a congressional lobbying firm. indicate whether

  Arden corporation just received a special order to make

arden corporation just received a special order to make 7500 units of a specialized calculator. if arden has sufficient

  Find how much may harry deduct as travel expenses for trip

The cost of meals and lodging while on vacation was $300 and $500, correspondingly. Find how much may Harry deduct as travel expenses for trip?

  What makes a repair extraordinary

What makes a repair extraordinary

  Corresponding values for black and decker

The following regression was run using all NYSE firms in 1995 YIELD = 0.0478 - 0.0157 BETA + 0.0000008 MKTCAP + 0.006797 DBTRATIO + 0.0002 ROE - 0.09 NCEX/TA R2 = 12.88% where BETA = beta of the stock, MKTCAP = market value of equity + book va..

  Guidance for particular transaction

What should an accountant do if the guidance for a particular transaction or event is not specified within the FASB ASC?

  What is the organization and how would describe

What is the organization and how would you describe it? Who are the leaders of the organization? Is the organization successful?

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