How much is the beta for our target firm

Assignment Help Financial Accounting
Reference no: EM132918578

Problem 1: EasyCloud Co. has 40 million shares outstanding, currently trading at $1 per share, this Co. has $20 million debts from their corporate bond. Assume you want to calculate the cost of equity which requires beta of this company. You plan to use an industry average beta taken from other comparable firms, which is 1.5, based on an industry average debt to asset ratio of 40% within the same industry. Calculate how much is the beta for our target firm, assuming tax rate is 35%.

Reference no: EM132918578

Questions Cloud

What was the purchase price of the refrigerator : What was the purchase price of the refrigerator? Carmella purchased a refrigerator under a conditional sale contract that required 33 monthly payments of $62.76
What are the after-tax proceeds from the sale : If the equipment is sold at the end of its fourth year for $10,000, what are the after-tax proceeds from the sale, assuming the marginal tax rate is 35 percent?
What is the total credit equivalent amount : What is the total credit equivalent amount? A two-year loan commitment with a face value of $120 million, a standby letter of credit with a face value.
What fortnightly amount could receive : Assess Ethel's eligibility for the aged pension at 1 July 2020 and determine what fortnightly amount she could receive. Show all working.
How much is the beta for our target firm : Calculate how much is the beta for our target firm, assuming tax rate is 35%. EasyCloud Co. has 40 million shares outstanding, currently trading at $1 per share
Satisfy the ethical demand of emptala : Imagine that you are the CEO of a not-for-profit-hospital. How would you satisfy the ethical demand of EMPTALA?
How do make the tax-related journal entries : How do make the tax-related journal entries for 2019 to 2023. Brock Corp. believes that it will be able to use any loss carryforward in future years.
What is the concentration limit : FI capital to a particular sector and that the amount recovered per dollar of defaulted loans in this sector is 70%. What is the concentration limit
How much is face value that high tech has to pay back : How much is Face Value that High Tech has to pay back to Geo Engin under various maturity dates of 60, 90 and 120 days if Geo Engin advances exactly $35 Million

Reviews

Write a Review

Financial Accounting Questions & Answers

  Explain how valuation approach may generate accurate result

Explain how this valuation approach may generate accurate results. Evaluate the inherent challenges associated with earnings-based valuation.

  Finding the profit margin and round the net income

Y3K, Inc., a total asset turnover ratio of 1.4565, sales of $4,100, and a debt equity ratio of 1.30. If its return on equity is 13 percent, what its net income? Start by finding the Profit Margin and round the net income to a whole dollar amount.

  What was the cash balance on February

Hal Company had cash receipts of $6,500 and paid out $8,000 for expenses. The February 28 cash balance was $4,300. What was the cash balance on February 1

  Illustrate what is the maximum amount of before-tax salary

Lara's employer has a 40 percent marginal tax rate. Ignoring payroll taxes, illustrate what is the maximum amount of before-tax salary Lara would give up to receive health insurance?

  Record the transaction in the books of the lessee

Record the transaction in the books of the lessee. Beginning December 30, 2019, JJI entered into a contract with Carlin's Inc. for the use

  Explain the impact of the pandemic on the labour market

Assume that the COVID-19 pandemic generates an economic slowdown. Explain the impact of the pandemic on the labour market with a specific focus

  How much should the company recognize as revenue

How much should the company recognize as revenue for the year? Explain how the revenue recognition rule should be applied in this case

  Calculation of liquidity ratios of heineken and boston beer

Annual report, ratios and any other sources, Stapel paper, Excel ratio sheet, Reference page, Power point slides (one page), and MSN or other ratios pages

  How do compute what is the project payback

Project L costs $75,000, its expected cash inflows are $10,000 per year for 11 years, and its WACC is 13%. What is the project's payback?

  The best example of direct tax

A debit item on the U. S. balance of payments is any transaction that. The best example of a direct tax is a(n)

  How do calculate the amount of dividends to be paid

How do Calculate the amount of dividends to be paid to each group of shareholders (i.e. preferred and common), assuming the preferred shares are cumulative)

  What firm degree of combined leverage of la cucaracha

The firm's operating leverage is 2.68. What is the firm's degree of combined (total) leverage of La Cucaracha Pest Control, Inc. ?

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