Reference no: EM131558812
Cost of Equity
The earnings, dividends, and common stock price of Shelby Inc. are expected to grow at 4% per year in the future. Shelby's common stock sells for $21.25 per share, its last dividend was $2.50, and the company will pay a dividend of $2.60 at the end of the current year.
Using the discounted cash flow approach, what is its cost of equity? Round your answer to two decimal places.
%
If the firm's beta is 1.4, the risk-free rate is 6%, and the expected return on the market is 12%, then what would be the firm's cost of equity based on the CAPM approach? Round your answer to two decimal places.
%
If the firm's bonds earn a return of 8%, and analysts estimate the market risk premium is 3 to 5 percent, then what would be your estimate of rs using the over-own-bond-yield-plus-judgmental-risk-premium approach? Round your answer to two decimal places. (Hint: Use the midpoint of the risk premium range).
%
On the basis of the results of parts a through c, what would be your estimate of Shelby's cost of equity? Assume Shelby values each approach equally. Round your answer to two decimal places.
%
|
Company own sales force versus independent sales agents
: What are the pros and cons of using a company's own sales force versus independent sales agents?
|
|
Inefficient market advocates argue
: Inefficient market advocates argue that. Inefficient market advocates, the pattern on size portfolio returns is believed to be.
|
|
Calculate the amount of profits in swiss francs
: Can you make a profit via triangular arbitrage? If you have an initial 12,000 Swiss francs, calculate the amount of profits in Swiss Francs.
|
|
What would you recommend to the city and why
: Baltimore is considering a purchase of LED Christmas lights for the city's tree. What would you recommend to the city and why?
|
|
The firm cost of equity based on the CAPM approach
: Using the discounted cash flow approach, what is its cost of equity? what would be the firm's cost of equity based on the CAPM approach?
|
|
What is its profit-loss when the expiration spot rate
: What is XYZ Corporation's breakeven value? What is its profit/loss when the expiration spot rate is a) $1.2, b) 1.75?
|
|
Calculate the arbitrage profit-loss to the us investor
: Calculate the arbitrage profit/loss to the US investor who borrows $1,000 for this strategy?
|
|
Discuss exchange-rate quotations-in terms of spot rates
: Discuss (and, if possible, give contemporary examples of) exchange-rate quotations, in terms of spot rates, forward rates, real exchange rates.
|
|
What percentage of your income did you pay in fica taxes
: If you made $50,000 and were self-employed last year what percentage of your income did you pay in FICA taxes?
|