Calculate the? ganado cost of equity

Assignment Help Financial Management
Reference no: EM131905642

Maria? Gonzalez, Ganado's Chief Financial? Officer, estimates the? risk-free rate to be 3.00%, the? company's credit risk premium is 3.80?%, the domestic beta is estimated at 1.14?, the international beta is estimated at 0.93, and the? company's capital structure is now 55?% debt. The expected rate of return on the market portfolio held by a? well-diversified domestic investor is 9.8?% and the expected return on a larger globally integrated equity market portfolio is 8.80%. The? before-tax cost of debt estimated by observing the current yield on? Ganado's outstanding bonds combined with bank debt is 7.80?% and the? company's effective tax rate is 40%. For both the domestic CAPM and? ICAPM, calculate the? following:

a.? Ganado's cost of equity

b.? Ganado's after-tax cost of debt

c.? Ganado's weighted average cost of capital

Reference no: EM131905642

Questions Cloud

What is the dollar cost of this debt : What is the dollar cost of this debt if the pound depreciates from ?$2.0210/£ to ?$1.9460?/£ over the? year?
How much should mia pay for the bonds : How much should Mia pay for the bonds, assuming that interest is paid semi-annually ?
How much is the bond price : How much is the bond’s price (clean)? How much is the bond’s accrued interest? How much is the bond’s dirty price?
What is the company wacc : You are given the following information for Huntington Power Co. Assume the company’s tax rate is 30 percent. What is the company's WACC?
Calculate the? ganado cost of equity : calculate the? Ganado's cost of equity.? Ganado's after-tax cost of debt.? Ganado's weighted average cost of capital
What is the true initial cost figure southern : What is the true initial cost figure Southern should use when evaluating its project?
Research factors would you use in developing media planning : What primary and secondary research factors would you use in developing the media planning?
Compute the beta of drucker corporation stock : The analyst considers each state to be equally likely. Using these data, compute the beta of Drucker Corporation's stock.
What is the wacc for the company : The Saunders Investment Bank has the following financing outstanding. What is the WACC for the company?

Reviews

Write a Review

Financial Management Questions & Answers

  How does the electric company know its revenue

When an electric utility customer uses electricity, the electric company has earned revenues.- How does the electric company know its revenue for a given year? Explain.

  Discuss violation of the efficient market hypothesis

Discuss a violation of the Efficient Market Hypothesis and identify which level of efficiency (weak, semi-strong, or strong) would be violated and why. In your discussion, also indicate whether this situation presents an abnormal return opportunity a..

  Possibility of reopening of one of mothballed loading docks

The Tenova Company is evaluating the possibility of reopening of one of its mothballed loading docks.

  Corporate bond has an annual coupon

A 10-year corporate bond has an annual coupon of 9%. The bond is currently selling at par ($1,000). Which of the following statements is INCORRECT?

  What is the time to maturity of the option

Suppose you are considering a European call option with a strike price of $110. What is the time to maturity of this option where the boundary condition begins to be non-zero?

  What are the attributes of successful entrepreneurs

What are the attributes of successful entrepreneurs? How can organizations keep employees motivated who possess high levels of entrepreneurial attributes?

  Financial planner offers you two different investment plans

Your financial planner offers you two different investment plans. Plan X is a $10,000 annual perpetuity. Plan Y is a 12-year, $20,000 annual annuity.

  Compute the expected share price at the end of 2014

Given the information below for StartUp.Com, compute the expected share price at the end of 2014 using price ratio analysis.

  Which stock would be more attractive to diversified investor

Stock X has a 10% expected return, a beta coefficient of 0.9 and a 35% standard deviation of expected returns. Stock Y has a 12.5% expected return, a beta coefficient of 1.2, and a 25% standard deviation. The risk-free rate is 6%, and the market risk..

  Issues bonds to public for financing of various projects

Every government collects taxes from people and also issues bonds to public for its financing of various projects and schemes. Hence, if the government cannot repay bonds it will collect money in the taxes and will use such money for repaying bonds.

  What is the current share price

Bui Corp. pays a constant $12 dividend on its stock. The company will maintain this dividend for the next nine years and will then cease paying dividends forever. Required: If the required return on this stock is 10 percent, what is the current share..

  What is the irr of this project

Evaluate the project given the following information: Assuming straight-line depreciation to zero, what is the IRR of this project?

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