Unlevered beta-what is cost of equity

Assignment Help Financial Management
Reference no: EM131599692

The XYZ Company has an unlevered beta of 1.25. The firm currently has no debt, but is considering changing its capital structure to be 30% debt and 70% equity. Its corporate tax rate is 40%, the current risk-free rate is 5% and the market risk premium is 4%. What is XYZ's cost of equity?

Reference no: EM131599692

Questions Cloud

What is the year one operating cash flow : You work for the Thibodeaux Drilling Company, What is the Year 1 operating cash flow?
Pay the loan off by making your planned monthly payments : How much faster could you pay the loan off by making your planned monthly payments of $250 with the new card?
What is the optimal capital structure : Dilbert Jones Corporation (DJC) has a projected stable growth rate of 5.5%. What is the optimal capital structure for DJC?
What types of cost sharing in health insurance are effective : What types of cost sharing in health insurance are most effective?
Unlevered beta-what is cost of equity : The XYZ Company has an unlevered beta of 1.25. What is XYZ's cost of equity?
What is the difference between the two firms roes : What is the difference between the two firms' ROEs?
What portion of the capital budget will be funded with debt : Betsy’s Fashions is forecasting EPS of $5.00 this year on its 5 million shares of stock outstanding. what portion of the capital budget will be funded with debt
What is williams current stock price : The Williams Company's last dividend (D0) was $2.50. Its dividend growth rate is expected to be constant at 25% for 3 years,
All equity is from retained earnings : The target capital structure consists of 40% debt and 60% common equity. What is the company’s WACC if all equity is from retained earnings?

Reviews

Write a Review

Financial Management Questions & Answers

  Which will be depreciated using straight-­-line

A doggy day care center is replacing old equipment and installing three new pieces of equipment for a total cost of $250,000, which will be depreciated using straight-­-line over four years. The old equipment being replaced will be sold for $35,000 a..

  Issued convertible bonds

Pacheco Inc. issued convertible bonds 10 years ago. Each bond had an initial term of 30 years, had a face value of $1,000, paid a coupon rate of 11%, and was convertible into 20 shares of Pacheco stock, which was selling for $30 per share at the time..

  What is the approximate and exact real rate of interest

what is the approximate and the exact real rate of interest?

  What is your total return for last year

The market price for your stock is now $101.67. What is your total return for last year?

  Information about elkridge sporting goods

Given the following information about Elkridge Sporting Goods, Inc., construct a balance sheet for June 30, 2014. On that date the firm had cash and marketable securities of $25,135, accounts receivable of $43,758, inventory of $166,700, net fixed as..

  Lump sum needed today to purchase this pension

hat is the amount of the lump sum needed today to purchase this pension?

  Relationship with sales increase in financial forecasting

Forecast and holding company balance sheet, you bring a balance sheet and determine all items that have direct relationship with sales increase, don’t bring a template version of a balance sheet, bring a new/real one and determine all the items that ..

  What is the expected return on this portfolio

A stock has a beta of 1.12, an expected return of 10.22 percent, and lies on the security market line. A risk-free asset is yielding 3.51 percent. Ferghus wants to create a $15,000 portfolio that is comprised of these two securities and that will hav..

  Technologies is using modified internal rate of return

Technologies Inc is using modified internal rate of return (MIRR) when evaluating projects. The company is able to reinvest cash flows received from the project at an annual rate of 9.70%. The initial outlay for the project is $496,600. Find the MIRR..

  What will happen to real gdp and to the amount

What will happen to real GDP and to the amount of labor employed, aggregate consumption, and aggregate savings?

  Find an article or irs tax code section

Discuss one source of income that is not taxed. Do you think this is fair, why or why not? Find an article or IRS Tax Code section as the basis of your discussion. Why do you think there are so many filing statuses?

  How much better it is in present value terms

You are considering buying a house for $200,000. You have $40,000 in your bank account which pays 1% APR compounded monthly. If you contribute 10% of the price of the house as a down payment, the terms of your mortgage will be an original balance of ..

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