User Account

All Pages

Expected cost of capital of the subsidiary

Assignment Help Finance Basics
Reference no: EM133120955

Tanket is a firm operating in India. It currently does not have any North American operations. It is considering establishing a manufacturing and logistic facilities in the US via a wholly owned subsidiary. Two different investment banks have been hired in order to estimate the expected cost of capital of the subsidiary when it is listed on a US exchange in the future. Bank of New York - Mellon has the following estimates:

Estiamte of Correlation between security and market: 0.82

Estimate of standard deviation firm's returns: 43%

Estimate of standard deviation of market's returns: 22%

Risk-free rate: 3.43%

Estimate of firm's cost of debt in the US market: 6.49%

Expected future return of market: 11.79%

Tax Rate: 38%

Proportion of Equity 64%

Reference no: EM133120955

Questions Cloud

What is the value of the firm under plan i : Rolston Corp. is comparing two different capital structures: an all-equity plan (plan I) and a levered plan (plan II). Under plan I, Rolston would have 265,000
What amount will the insurance company pay for the damages : Damage to the parked car was $12,300, and damage to the store was $8,100. What amount will the insurance company pay for the damages
Calculate the value of a bond : Calculate the value of a bond that will mature in 18 years and has a face value of $1000. The annual coupon interest rate is 14 percent, and the investors requi
What is the average expected rate of inflation : Suppose that the annual expected rates of inflation over each of the next five years are 5 percent, What is the average expected rate of inflation
Expected cost of capital of the subsidiary : Tanket is a firm operating in India. It currently does not have any North American operations. It is considering establishing a manufacturing and logistic facil
What will be the expected return and the beta : AT&E has an expected return of 20 percent with a beta of 2.0. What will be the expected return and the beta of your portfolio after you purchase the new stock
Cost-benefit analysis and government investments : Cost-Benefit Analysis and Government Investments what factors do you believe influence the cost of supplying various public goods. What might cause these costs
How cash flow impacted by decision : Share an example of a situation when you used TVM calculations to support a financial decision either in your professional or personal life
Determine dividends per share for preferred and common stock : Sabas Company has 20,000 shares of $100 par, 2% cumulative preferred stock. Determine dividends per share for preferred and common stock

Reviews

Write a Review

Finance Basics Questions & Answers

  What is altman z- score model

What is Altman's Z- Score model. Why it is used? What calculated value of z- score model tell? Wich is more important variable in z-score model?

  What is the project net present value

The Bush Oil Company is deciding whether to drill for oil on a tract of land that the company owns. The company estimates that the project would cost $8 million today.

  Determine the objective function

A corporation produces two products: Product A and B. Each product must go through two processes. Each Product A produced requires 2 hours in Process 1 and five hours in Process two.

  How many dollars will the cash management system free up

Neon Light Company of Kansas City ships lamps and lighting appliances throughout the country. Ms. Neon has determined that through the establishment.

  What is the cost of one contract

The price of a December put futures option is quoted as 5-52. Each Treasury bond futures contract is for delivery of $100,000 in Treasury bonds. What is the cost of one contract?

  What is the expected beta for matrade

Within a year, the share price would rise to RM75 and its dividend yield is 5%. What is the expected beta for Matrade for it to rise to that level?

  Minimum margin requirement of means an investor

Can borrow up to 75% of the total share price Must pay an interest of 75% of Treasury bill rates on a loan Must supply at least 75% of the total share price

  Evaluate effective internal controls

Evaluate effective internal controls that minimize audit risk and potentially reduce the risk of fraud. Use technology and information resources to research.

  Breakeven price of the position

You purchase one JNJ 75 put option for a premium of $3. Ignoring transaction costs, the breakeven price of the position is. In order for you to be indifferent between the after tax returns on a corporate bond paying 8.5% and a tax-exempt municipal ..

  You want to have 1 million in real dollars in an account

you want to have 1 million in real dollars in an account when you retire in 30 years. the nominal return on your

  Find the npv and pi of a project

Find the NPV and PI of a project that costs $1500 and returns $800 in one year and $850 in year two. Assume the project's cost of capital is 8%.

  Stock price according to the constant growth dividend model

What is the stock price according to the constant growth dividend model?

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