Earnings to be used in capital budgeting analysis

Assignment Help Financial Management
Reference no: EM131454129

The Yo-Yo Corporation tries to determine the appropriate cost for retained earnings to be used in capital budgeting analysis. The firm’s beta is 0.63. The rate on six-month T-bills is 3.93%, and the return on the S&P 500 index is 6.88%. What is the appropriate cost for retained earnings in determining the firm’s cost of capital? Round the answers to two decimal places in percentage form.

Reference no: EM131454129

Questions Cloud

Views on what is right and wrong differ : Why do people's views on what is right and wrong differ? Why would an unemployed sawmill worker in northern California feel differently about cutting old growth
What is the form cost of preferred stock financing : Nature Food Inc. needs to estimate the cost of financing on preferred stock. What is the form’s cost of preferred stock financing?
What is the market-to-book ratio for chisel corporation : what is the market-to-book ratio for Chisel Corporation?
How would you describe or define organized crime : How would you describe or define organized crime? How does your perception compare to the definitions in the readings
Earnings to be used in capital budgeting analysis : The Yo-Yo Corporation tries to determine the appropriate cost for retained earnings to be used in capital budgeting analysis.
How could government regulations have prevented : How could government regulations have prevented or mitigated the credit crisis of 2008
Determine the required changeover time : Annual demand for a part is 500 units. The pan is currently produced in batches. It takes 2.0 hr to set up the production machine for this pan.
Overview of the juvenile justice system : An overview of the juvenile justice system Compare the key differences between juvenile and adult courts, including language differences
What is predction equation : First obtain the prediction equation and compute R2. Then, graph the data. Looking at your results, what does this suggest about which step should come first?

Reviews

Write a Review

Financial Management Questions & Answers

  The amount of funds released by the lockbox arrangement

J-Mart, a nationwide department store chain, processes all its credit sales payments at its suburban Detroit headquarters. The firm is considering the implementation of a lockbox collection system with an Atlanta bank to process monthly payments from..

  Explain its impact upon cumulative earnings

The relevance of reported asset values is lined with their ultimate recognition as reported expenses. Provisions and liability values on the balance sheet may also affect earnings quality. Give an example of an overstated asset and explain its impact..

  What is the price that he should pay for the bond

The Treasury department issued a 10-year bond on January 1, 2015. The par value is $1,000 and the annual coupon rate is 10%. The bond pays two coupons every year, one at the end of June and one at the end of December. The required annual yield is 8%...

  Supplement her government funded pension plan

A junior employee, who just turned 25, decides to set up a personal retirement fund to supplement her government funded pension plan during her first 20 years of retirement, what lump sum must she invest today at 6 percent in order to achieve her ret..

  What is the equivalent rate with continuous compounding

An interest rate is 7% per annum when expressed with annual compounding. What is the equivalent rate with continuous compounding?

  Directly increase cash shown on firms balance sheet

Which of the following actions are most likely to directly increase cash as shown on a a firm's balance sheet?

  What is the yen and euro cross rate

If the price of a U.S dollar is 110 Japanese yen and also 1.05 Euros what is the yen/euro cross rate? JPMorgan Chase reported total stock holders’ equity of $176106000000 on 12/31/2010. there were 3910294110 shares outstanding at that time but averag..

  Expected return on the investment with a beta

The expected return on the S&P 500 is 10% and the risk-free rate is 3%. What is the expected return on the investment with a beta of (a) 0.2, (b) 0.5, and (c) 1.4?

  Construction of plant to manufacture energy saving device

ELC Electrical Services is considering the construction of a plant to manufacture a new energy saving device for small offices. The company recently commissioned a $100,000, two-year study to assess the market demand for the proposed product. Using t..

  Capital investment proposals

The division managers of Chester Construction Corporation submit capital investment proposals each year for evaluation at the corporate level. Typically, the total dollar amount requested by the divisional managers far exceeds the company’s capital i..

  What is expected total return and what is dividend yield

Consider Ford stock (F) with a current price of $20 per share and a standard deviation of returns of 15%. An investor expects to sell Ford stock in one year at $21 per share and expects the firm to pay a dividend of $1 per share at the end of the yea..

  The bond market and the loanable funds market

Using the supply and demand graphs for both the bond market and the loanable funds market, show the effects of an increase in the expected return on stocks.

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