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The equity of Ruby Developments has a beta of 1.1. The earnings of Ruby are expected to grow at 5 per cent indefinitely. Ruby maintains a constant payout ratio. The risk-free rate is 4 per cent and the expected return on the market is 10 per cent. Its last dividend was 20 cents per share and a share is currently selling for $3.40. a. Calculate the cost of equity using the CAPM and the dividend growth model. Comment on the results. b. If the cost of Ruby 's debt is 8 per cent, the target debt–equity ratio is 1:3 and the current tax rate is 30 per cent, what is the weighted average cost of capital for Ruby?
A firm has a $100 million capital budge. It is considering two projects that each cost $100 million. Project A has an IRR of 20 percent, and NPV of $9 million, and will be terminated after 1 year at a profit of $20 million, resulting in an immediate ..
Determine the least expensive way of manufacturing and shipping locks from its plants to the distributors.
A mining company is considering a new project. Because the mine has received a permit, the project would be legal;
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A Homeowner purchases as a property for $900,000. What is the effective cost of the loan?
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