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Epley Industries stock has a beta of 1.30. The company just paid a dividend of $.30, and the dividends are expected to grow at 4 percent. The expected return on the market is 13 percent, and Treasury bills are yielding 5.7 percent. The most recent stock price for the company is $74.
a. Calculate the cost of equity using the DCF method. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
b. Calculate the cost of equity using the SML method. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Benson Corporation announced that its net income for the year ended June 30, 2015 is $1,600,000. The company also reported EBITDA of $5,000,000, and depreciation and amortization expense of $1,250,000. If the company's income tax rate is 50 percent, ..
Ward Corp. is expected to have an EBIT of $2,450,000 next year. Depreciation, the increase in net working capital, and capital spending are expected to be $176,000, $107,000, and $126,000, respectively. All are expected to grow at 19 percent per year..
Compute the internal rate of return for each project.- Compute the net present value for each project if the firm has a 10 percent cost of capital.
Find the payoff of an interest rate call option on the annual rate with an exercise rate of 10 percent if the one-period rate at expiration is 11 percent.
Suppose you have the following information about the stocks of Pepsico (PEP), Qualcomm (QCOM) and Ross Stores (ROST): ρ E(r) σ PEP QCOM ROST PEP 11% 20% 1 −0.2 0.3 QCOM 15% 35% 1 −0.1 ROST 9% 15% 1 What are the expected return and standard deviation ..
Seth borrows X from Tina and agrees to pay it back over 20 years using the sinking fund method. At the end of each year, Seth will deposit 400 into the sinking fund, as well as pay Tina the interest on the loan. If Tina charges Seth an annual effecti..
Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 16 years to maturity that is quoted at 100 percent of face value. The issue makes semiannual payments and has an embedded cost of 6 percent annually. Wh..
Lionel has to pay a penalty for filing his taxes late. How many years late is his payment?
Reynolds Construction needs a piece of equipment that costs $350. Reynolds either can lease the equipment or borrow $350 from a local bank and buy the equipment. If the equipment is leased, the lease would not have to be capitalized. In either case, ..
Keiper, Inc., is considering a new three-year expansion project that requires an initial fixed asset investment of $2.76 million. The fixed asset will be depreciated straight-line to zero over its three-year tax life, after which time it will be wort..
Stock in Cheezy-Poofs Manufactory is currently priced at $50 per share. A call option with a $50 strike and 90 days of maturity is quoted at $1.95. Compare the percentage gains and losses from a $97,500 investment in the stock versus the option in 90..
Is the expected return from holding a US bond greater than or less than the expected return from holding a swiss bond?
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