User Account

All Pages

Corporate and market betas differ for the project

Assignment Help Corporate Finance
Reference no: EM13195635

Suppose that Apex Health Services has four different projects. These projects are listed below, along with the amount of capital invested and estimated corporate and market betas:


Project

Amount Invested

Corporate Beta

Market Beta

Walk - In Clinic

500000

1.5

1.1

MRI Facility

2000000

1.2

1.5

Clinical Laboratory

1500000

0.9

0.8

X-ray Laboratory

1000000

0.5

1


$5000000

========

a. Why do the corporate and market betas differ for the same project?

b. What is the overall corporate beta of Apex Health Services? Is the calculated beta consistent with the corporate risk theory?

c. What is the overall market beta of Apex Health Services?

d. How does the riskiness of Apex's stock compare with the riskiness of an average stock?

e. Would stock investors require a rate of return on Apex that is greater than, less than, or the same as the return on an average stock?

Reference no: EM13195635

Questions Cloud

State crude product in the minimum amount of boiling solvent : Dissolve the crude product in the minimum amount of boiling solvent to keep the solution of the product at its saturation point and then allow to cool so pure crystals will form.
Calculate the price of a constant-maturity : Using a graph, comment on how well the market predicted the future moves of the spot 6-month rate on both dates and in general, are forward rates a good predictor of future interest rates?
State isopentyl alcohol is reacted of sulfuric acid : If 2.00 g of isopentyl alcohol is reacted with 10.0 mL of acetic acid and 2 drops of sulfuric acid, what is the theoretical yield? Report your value to TWO decimal places (x.xx g).
Compute the dryness fraction of the steam : Calculate the dryness fraction of the steam between the separator and the throttle, and hence the dryness fraction of the steam being bled from the system.
Corporate and market betas differ for the project : Why do the corporate and market betas differ for the same project and what is the overall corporate beta of Apex Health Services? Is the calculated beta consistent with the corporate risk theory?
State is effect of salt addition to water on the boiling : Suppose you want to cook pasta in boiling, salty water. What is effect of salt (NaCl) addition to water on the boiling point temperature of the resulting solution?
Cost of equity for raytheon company : Examine and explain the relationship between the systematic risk coefficient on the company's operations ('asset beta'), the systematic risk to its shareholders ('equity beta') and the relationship of both concepts to the debt/equity ratio of the ..
Determine how long the bus traveled at each rate : A bus traveled at an average rate of 50 miles per hour then reduced its average rate to 40 miles per hour for the rest of the trip. If the 220-mile trip took 5 hours, determine how long the bus traveled at each rate.
Write the equation of a rational function : Write the equation of a rational function that has a vertical asymptote at 3, a horizontal asymptote at 2, a zero of the function at -1 and a y-intercept at-6.

Reviews

Write a Review

Corporate Finance Questions & Answers

  Impact of the global economic crisis on business environment

This paper reviews the article of ‘the impact of the global economic crisis on the business environment' that is written by Roman & Sargu (2011).

  Explain the short and the long-run effects on real output

Explain the short and the long-run effects on real output, price, and unemployment

  Examine the requirements for measuring assets

Examine the needs for measuring assets at fair value in accounting standards

  Financial analysis report driven by rigorous ratio analysis

Financial analysis report driven by rigorous ratio analysis

  Calculate the value of the merged company

Calculate the value of the merged company, the gains (losses) to each group of shareholders, NPV of the deal under different payment methods. Synergy remains the same regardless of payment method.

  Stock market project

Select five companies for the purpose of tracking the stock market, preparing research on the companies, and preparing company reports.

  Write paper on financial analysis and business analysis

Write paper on financial analysis and business analysis

  Intermediate finance

Presence of the taxes increase or decrease the value of the firm

  Average price-earnings ratio

What is the value per share of the company's stock

  Determine the financial consequences

Show by calculation the net present value for the three alternatives (no education, network design certification, mba). Also, according to NPV suggest which alternative you advise your friend to choose

  Prepare a spread sheet model

Prepare a spread sheet model for the client that determines NPV/IRR with and without tax.

  Principles and tools for financial decision-making

Principles and tools for financial decision-making. Analyse the concept of corporate capital structure and compute cost of 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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd