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Berta Industries stock has a beta of 1.20. The company just paid a dividend of $0.50, and the dividends are expected to grow at 6 percent. The expected return on the market is 11 percent, and Treasury bills are yielding 5.2 percent. The most recent stock price for Berta is $69.
a. Calculate the cost of equity using the DCF method. (Round your answer to 2 decimal places. (e.g., 32.16))
DCF method %
b. Calculate the cost of equity using the SML method.
Red Roofs, Inc. has current liabilities of $24,300 and accounts receivable of $7,800. The firm has total assets of $43,100 and net fixed assets of $23,700. The owners' equity has a book value of $21,400. What is the amount of the net working capital?..
In the current year, Dentist purchased two limited partnership interests. What is the amount of Dentist’s passive activity credit for the current year?
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A stock is expected to pay a dividend of $0.30 at the end of the year (i.e., D1 = $0.30), and it should continue to grow at a constant rate of 7% a year. If its required return is 12%, what is the stock's expected price 5 years from today?
You are in the market for a new refrigerator for your company’s lounge, and you have narrowed the search down to two models. The energy-efficient model sells for $700 and will save you $45 at the end of each of the next five years in electricity cost..
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Define EBIT and discuss why the optimal level of leverage from tax-saving perspective is the level at which interest equals EBIT. Does this have connection under-leveraging corporations, both domestically and internationally?
Suppose the Japanese yen exchange rate is ¥79 = $1, and the British pound exchange rate is £1 = $1.63. What is the cross-rate in terms of yen per pound?
Acne Co. has average sales of $40. You could reduce collection time by 2 days by using a lockbox facility in Omaha, NE. Acbe receives an average of 10,000 checks per day, The annual interest rate is 9%. The back charges $160 daily for the lockbox ser..
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