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The earnings dividends, and stock price of Shelby Inc. are expected to grow Using the discounted cash flow approach, what is the cost of equity? The earnings dividends, and stock price of Shelby Inc. are expected to grow a. Using the discounted cash flow approach, what is the cost of equity? If the firm’s beta is 1.6, the risk-free rate is 9%, and the expected return on the market is 13%, then what would be the firms cost of equity based on the (CAPM) approach. K3= p/d + g =$2.14/$23 = 7% =9.3% + 7% =16.3% b. If the firm’s beta is 1.6, the risk-free rate is 9%, and the expected return on the market is 13%, then what would be the firms cost of equity based on the (CAPM) approach? Expected return = RF+β×Rp RF is risk free return Rp is risk premium = 9%+1.6× (13%-9%) = 15.4% c. If the firms bonds earn a return of 12%, what will it be using the bond-yield-plus-risk-premium approach? (Hint: Use the midpoint of the risk premium rate.) K=bond rate + risk premium =12% + 4% = 16% This makes the Risk Premium 16% D. On the basis of the results of parts a through c, what would you estimate Shelby’s cost of equity to be?
According to Classical economists, which type of fiscal policy financing produces "crowding out?"
Demand for a certain product is forecast to be 9600 units for the year 2014. The product follows the seasonal pattern. Based on monthly forecast that were made in 2011, 2012, and 2013 the January seasonal index was calculated to be 1.25. What is the ..
The risk of failure is an inherent part of free enterprise. Does society have an obligation to come to the aid of entrepreneurs who try but fail? Why or why not? Also, please discuss some ways you can minimize your risk.
A family that won a $100,000 prize on America’s Funniest Home Videos decided to put one-half of the money in a college fun for their child who was responsible for the prize. If the fund earned interest at 6% per year, how much was in the account 14 y..
You are the president of a commercial bank that is also a member of the Federal Reserve System, and you want to increase your bank’s reserves. But you currently have negative excess reserves, in which case your bank is borrowing from the Fed and the ..
Utilize the sticky-income theory of cumulative provide to explain illustrate what will take place to o/p also the price level play in this adjustment
Assume the following data for a country: total population, 500; population under 16 years of age or institutionalized, 120; not in labor force, 150; unemployed, 23; part-time workers looking for full-time jobs, 10. What is the size of the labor force..
The entire principal of the borrowed amount of $10,000 will be repaid in 2 years. However, the quarterly interest of $330 must be paid every 3 months. Find the nominal annual interest rate that you are paying.
Who are the characters Assumed to represent. Illustrate what did they want.
At what price of food in terms of manufactures would A and B respectively supply food? Would trade take place between A and B in David Ricardo’s world? How many manufactures could B supply?
A firm sells its product in a perfectly competitive market where other firms charge a price of $130 per unit. The firm’s total costs are C(Q) = 40 + 10Q + 2Q2. How much output should the firm produce in the short run...How many units?What price shoul..
Suppose population growth rate is 0.03, inome elastiity of demand for consumption is 0.75 and inome growth rate of 0.05. what would be the growth rate of agriultural production for balaned growth of the economy.
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