User Account

All Pages

Required rate of return on okefenokee stock

Assignment Help Finance Basics
Reference no: EM132199915

The total market value of Okefenokee Real Estate Company's equity is $12 million, and the total value of its debt is $8 million. The treasurer estimates that the beta of the stock currently is 0.5 and that the expected risk premium on the market is 6%. The Treasury bill rate is 5%.

What is the required rate of return on Okefenokee stock?

What is the beta of the company's existing portfolio of assets? The debt is perceived to be virtually risk-free. 

Estimate the weighted-average cost of capital assuming a tax rate of 20%. 

Estimate the discount rate for an expansion of the company's present business. 

Suppose the company wants to diversify into the manufacture of rose-colored glasses. The beta of optical manufacturers with no debt outstanding is 1.5. What is the required rate of return on Okefenokee's new venture? (You should assume that the risky project will not enable the firm to issue any additional debt.)

Reference no: EM132199915

Questions Cloud

Discuss the affects of poverty and hunger : Discuss the affects of poverty and hunger within a culture of capitalism and what we can do to fix the issue.
Decline in the near future even though the bond market : You expect interest rates to decline in the near future even though the bond market is not indicating any sign of this change. Which one of the following bonds
Assess the status of freedom for african-american : "Freedom is a moving target." Using the your personal experiences and that of the African-American experience.
Modern organizations operate in dynamic environment : Modern organizations operate in dynamic environment. Strategic managers and the OD practitioners are continuously seeking the ways to fit their organizations
Required rate of return on okefenokee stock : What is the required rate of return on Okefenokee stock? What is the beta of the company's existing portfolio of assets?
Variation in criminal punishment is linked to economic : Criminal sanctions and victimization work to form a system of disadvantage that perpetuates stratification and poverty.
What will happen to its current ratio : A firm uses $1 million in cash to purchase inventories. What will happen to its current ratio?
Dynamically changing influences of international business : What are the dynamically changing influences of international business and how are strategic decisions made in terms of entering and exiting new markets?
What is the price-earnings ratio : 500,000 shares, market value is $85 million and net income of $18 million. What were earnings per share? What is the price-earnings ratio?

Reviews

Write a Review

Finance Basics Questions & Answers

  Determine the corresponding z values

Determine the corresponding z values for a 92.5 percent confidence interval.

  Analysis of cash flow and operating activities

Application: Analysis of Cash Flow and Operating Activities

  Find the current cost of valve

Rex manufacturing produces a line of equipment with a European servo value that cost $100 when the Euro was 83 cents. Now that the Euro is $1.59 cents the component is a problem.

  How much will the investor receive

An investor holds a Treasury bond with a face value of $5000, a coupon rate of 4%, and semiannual payments that matures on 15/01/2012. How much will the investor receive on 15/01/2012?

  What does the current treasury yield curve look like today

What does the current treasury yield curve look like today?

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Compare gross pro?t and net income as a percentage of sales

Compare gross pro?t and net income as a percentage of sales for these two companies. How might differences in their respective business models.

  Discounted cash flow techniques are capital budgeting

discounted cash flow techniques are capital budgeting techniques that take into account both the time value of money

  Calculate cost of common equity financing using capm

Paul Sharp is CFO of Fast Rocket Inc. He tries to determine the cost of equity financing for his company. The stock has a beta of 2.41.

  Compare and contrast options and forward markets

What are the three ways in which derivatives can be misused? Contrast dollar return and percentage return.- Compare and contrast options and forward markets.

  What advice do you have for the investor

Run all your analytics in excel and build a 15-year model where the house is bought and eventually sold debt free. What advice do you have for the investor?

  From the perspective of a senior business executive are

from the perspective of a senior business executive are cash dividends paid to shareholders good or bad or both good

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