User Account

All Pages

Corresponding minimum acceptable return on equity

Assignment Help Finance Basics
Reference no: EM131050188

A company's acceptable minimum return on capital (i.e., WACC) is 12%. If the debt/equity ratio is 1:1, and the after-tax cost of debt is 5% (the company is in the 40% tax bracket), what is the corresponding minimum acceptable return on equity?

Reference no: EM131050188

Questions Cloud

Effective interest rate be for these loans : The 2ndTD is for $125,000 @ 7.5% interest, 30/15 and the 3rd. TD is for $25,000 @ 9.0% interest only for 5 years. You are to work up the payment for all 3loans. Plus, what would the "effective" interest rate be for these loans?
Describe how this person was treated by western medicine : Describe how this person could also be treated with Chinese medicine. Use the Ashford University Library to locate a scholarly research study related to how Chinese medicine may help a person with this ailment. If it pertains to this situation, yo..
A population standard deviation : The following sample of size 12 was taken from a population that is normally distributed and that has a population standard deviation of 12.7:
Write an essay illustrating and explaining a methodology : I gave you the tender of engineering and construction case study and you have to apply the PRINCE2 or PMBOK methodologies on this tender.  Your task is to write an ESSAY illustrating and explaining a methodology for the project from one case study
Corresponding minimum acceptable return on equity : A company's acceptable minimum return on capital (i.e., WACC) is 12%. If the debt/equity ratio is 1:1, and the after-tax cost of debt is 5% (the company is in the 40% tax bracket), what is the corresponding minimum acceptable return on equity?
Conduct a ratio analysis of coral systems : Conduct a ratio analysis of Coral Systems' and Spatial Technology past income statements and balance sheets for year of 1994 and 1995.
Happens to the price of the bond : If the industry becomes more risky and the market now requires a 12% rate or return, what happens to the price of the bond? Assume this happens immediately after the bond is released.
Differences between cash flow and accounting income : 1. What are the differences between cash flow and accounting income? Why it is important to use cash flow in making capital budgeting decisions?
Shares of common stock outstanding selling : Best Bagels, Inc. (BB) currently has zero debt. Its earnings before interest and taxes (EBIT) are $100,000, and it is a zero growth company. BB's current cost of equity is 13%, and its tax rate is 40%. The firm has 20,000 shares of common stock ou..

Reviews

Write a Review

Finance Basics Questions & Answers

  Individuals overcome the barriers to change

In each case, how did the individuals overcome the barriers to change, and what were the resulting benefits?

  Determine which bond you purchase

Given the opportunity to invest in one of the three bonds given below, which would you purchase? Suppose an interest rate of 7 percent.

  How much will the equal monthly payments be

1. A homebuyer is taking out a mortgage with a balloon payment. The loan amount is $100,000 and the annual interest rate is 5%. The homebuyer will make equal monthly payments for 5 years except the last payment will include an additional payment of $..

  Briefly describe one 1 way the us financial markets impact

the u.s. financial system has many complexities and it is impacted by several environmental factors including federal

  You must make a payment of 162901 in 10 years to get the

you must make a payment of 1629.01 in 10 years. to get the money for this payment you will make 5 equal deposits

  What is the projected dividend for the coming year

The required return on this stock is 10 percent, and the stock currently sells for $76 per share. What is the projected dividend for the coming year?

  Calculate the expected return and standard deviation

Stock A has expected return of 12 percent and standard deviation of 40 percent. Stock B has an expected return of 18% and standard deviation of 60%. The correlation coeffecient between stocks A and B is 0.2.

  Manufacturing location strategy

What does this suggest about manufacturing location strategy?

  What would be the new value of rolen preferred stock

Suppose interest rate levels have risen to the point where the preferred stock now yields 11%. What would be the new value of Rolen's preferred stock? Round your answer to the nearest cent.

  What is meant by agency theory

Differentiate between the three financial statements with which managers should be familiar. How are they linked?

  Relationship between business and society

According to the textbook, the current world economy is increasingly becoming integrated and interdependent; as a result, the relationship between business and society is becoming more complex. Use the Internet to research one (1) of the following..

  How does collateral affect the interest rate on a bond

How does collateral affect the interest rate on a bond? How does subordination affect the interest rate on a bond too? What else might affect the interest rate on a bond?

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