Compute the expected net distributions to stakeholders

Assignment Help Accounting Basics
Reference no: EM132827717

Assume you expect the company's net income to remain stable at $2000 for all future years, and you expect all earnings to be distributed to stockholders at the end of each year, so that common equity also remains stable for all years (this also assume a clean surplus). Also, assume the compnay's beta=1.2, the market on risk premium is 6% and 10-year yield on risk free government bonds is 3%. Finally,assume the company has 1000 ordinary shares outstanding.

Problem 1: Using CAPM to estimate the company's equity cost of capital?

Problem 1: Compute the expected net distributions to stakeholders(dividends) for each future year.

Reference no: EM132827717

Questions Cloud

Worker critically injured after slipping off roof : A young worker has been critically injured from a fall that occurred while he was performing metal roof installation works on a double storey house under constr
What is amount of distribution and character of distribution : What is the amount of distribution and character of distribution (capital gain, capital loss, dividend income or return of capital)?
How can presence of accreditation standards improve quality : Explain at least three Joint Commission expectations that can have implications related to healthcare informatics. How do these expectations impact.
Explain the concept of international trade : Can you help with the following premises based on the international trade theories Instructions? Use same format below to answer:
Compute the expected net distributions to stakeholders : Compute the expected net distributions to stakeholders (dividends) for each future year. Using CAPM to estimate the company's equity cost of capital?
Process improvements in system design : Explain what a process is and activities in a process function as a system.
Identify and explain the 3 leadership styles : According to the University of Iowa studies, there are 3 leadership styles that a leader can use to lead his followers.
What was the cost of goods sold for the year : If the beginning finished goods inventory was $310,000 and the ending finished goods inventory was $260,00 what was the cost of goods sold for the year?
Explanatory mechanisms of employees : Review the article, "Perceptions of Sacrifice, Workplace Friendship and Career Concerns as Explanatory Mechanisms of Employees' Organisational Commitment," link

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