Reference no: EM132666297
1. Complete problem: Cost of Equity-CAPM
XYZ, Inc. has a beta of 0.8. The yield on a 3-month T-bill is 4%, and the yield on a 10-year T-bond is 6%. The market risk premium is 5.5%, and the return on an average stock in the market last year was 15%. What is the estimated cost of common equity using the CAPM? Show your work.
2. Complete problems: NPV, IRR, MIRR, Profitability Index, Payback, Discounted Payback
A project has an initial cost of $60,000, expected net cash inflows of $10,000 per year for 8 years, and a cost of capital of 12%. Show your work.
a. What is the project's NPV? (Hint: Begin by constructing a timeline).
b. What is the project's IRR?
c. What is the project's MIRR?
d. What is the project's PI?
e. What is the project's payback period?
f. What is the project's discounted payback period?
3. Your division is considering two investment projects, each of which requires an up-front expenditure of 20 million. You estimate that the investment will produce the following net cash flows:
Year Project A Project B
1 $5,000,000 $20,000,000
2 10,000,000 10,000,000
3 20,000,000 6,000,000
a. What are the two project's net present values, assuming the cost of capital is 5%? 10%? 15%?
b. What are the two projects' IRRs at these same costs of capital?
Show your work.
|
Discuss the traditional reasons for carrying inventory
: Explain why, in the traditional view of inventory, carrying costs increase as ordering cost decrease. Discuss the traditional reasons for carrying inventory
|
|
Details about stock yzx
: The following details about Stock YZX are known. The equity cost of capital is 7%, the EPS next year will be $2.00 per share, the dividend payout rate will be 8
|
|
Should bank management care about the charity
: If we applied an ethical perspective of Stakeholder Theory, should bank management care about the recommendation of the charity for One Parent Families.
|
|
What is the future value in 27 years
: What is the future value in 27 years of an ordinary annuity cash flow of $704 every quarter of a year at the end of the period
|
|
Cost of equity-capm
: XYZ, Inc. has a beta of 0.8. The yield on a 3-month T-bill is 4%, and the yield on a 10-year T-bond is 6%. The market risk premium is 5.5%, and the return
|
|
Why tactic could be helpful for a police officer
: Why is it so important to know the "competence" of the person to whom you are addressing a letter? Provide an example of why this approach/tactic could be.
|
|
Solve the taxable income and the current tax liability
: Solve the taxable income and the current tax liability for the year ended 30 June 2019 for Jefferson Limited by reconciling accounting profit
|
|
Find which characteristic of influence economic decisions
: Find Which characteristic of information, when omitted or misstated, could influence economic decisions taken by users on the basis of financial statements?
|
|
Prominent features of the global financial crises of 2008
: Explain the most prominent features of the global financial crises of 2008 on the world Economy and the financial system in particular?
|