Calculate the expected rate of return on joness stock

Assignment Help Accounting Basics
Reference no: EM131557712

Assignment

The manager of Sensible Essentials conducted an excellent seminar explaining debt and equity financing and how firms should analyze their cost of capital. Nevertheless, the guidelines failed to fully demonstrate the essence of the cost of debt and equity, which is the required rate of retum expected by suppliers of funds.

You are the Genesis Energy accountant and have taken a class recently in financing. You agree to prepare a PowerPoint presentation of approximately 6-8 minutes using the examples and information below:

1. Debt: Jones Industries borrows $600,000 for 10 years with an annual payment of $100,000. What is the expected interest rate (cost of debt)?

2. Internal common stock: Jones Industries has a beta of 1.39. The risk-free rate as measured by the rate on short-term US Treasury bill is 3 percent, and the expected return on the overall market is 12 percent. Determine the expected rate of return on Jones's stock (cost of equity). Here are the details:

Jones Total Assets

$2,000,000

Long- & short-term debt

$600,000

Common internal stock equity

$400,000

New common stock equity

$1,000,000

Total liabilities & equity

$2,000,000

Develop a 10-12-slide presentation in PowerPoint format. Perform your calculations in an Excel spreadsheet. Cut and paste the calculations into your presentation. Include speakers notes to explain each point in detail. Apply APA standards to citation of sources.

Reference no: EM131557712

Questions Cloud

Analyze the gendered constructions of virginity : What are the ways in which virginity and the prospect of "losing" one's virginity are framed and represented for the women in the show as compared to the men?
What does this tell us about people and cultures : How did the discovery and settlement of the New World contribute to the ideas of race and cultural superiority? What does this tell us about people and cultures
Examples of firms in an oligopolistic market : What are examples of firms in an oligopolistic market that abuse their power? Explain how they abuse their power and describe the impact on consumers.
Describe framework for managing and leading a security force : Describe the framework for managing and leading a security force. What is meant by maintaining force competencies in port security
Calculate the expected rate of return on joness stock : Internal common stock: Jones Industries has a beta of 1.39. Determine the expected rate of return on Jones's stock (cost of equity).
What is the central angle : The stop-board of a shot-put circle is a circular arc 1.22 m in length. The radius of the circle is 1.06 m. What is the central angle?
Review the case of wardrobe selection : WARDROBE SELECTION A female executive selecting her wardrobe purchased two blazers, four blouses, and three skirts in coordinating colors.
Monetary policies and fiscal policies : What monetary policies and fiscal policies were implemented during the recession from 2007 through 2009?
Describe the parameter the admissions offices : The average cost for the 100 students will e used to estimate the average cost - Describe the parameter the admissions offices wishes to estimate

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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