What estimate of the company cost of equity

Assignment Help Cost Accounting
Reference no: EM132753873

Problem 1: Stock in Daenerys Industries has a beta of 0.86. The market risk premium is 9.5 percent, and T-bills are currently yielding 3 percent. The company's most recent dividend was $2 per share, and dividends are expected to grow at a 3.5 percent annual rate indefinitely. If the stock sells for $31 per share, what is your best estimate of the company's cost of equity?

Multiple Choice

Option 1: 10.67%

Option 2: 10.18%

Option 3: 8.59%

Option 4: 11.17%

Option 5: 9.58%

Reference no: EM132753873

Questions Cloud

What is the depreciation expense : On January 1, 20X8, Conoco purchased a machine for $41,100,000. What is the depreciation expense for 20X8 if the corporation uses the units-of-production method
Compute the average download and quality of service measures : Find the range (the high and low) for each measure. Also compute the average download, upload, and quality of service measures.
What is the present value of this investment : If the company uses a discount rate of 19 percent on its investments, what is the present value of this investment
What is the firm share price today : V Energy Tech Ltd. has just paid dividend of $2.50 per share and expects that dividend will grow at same rate as its profits. What is the firm share price today
What estimate of the company cost of equity : Stock in Daenerys Industries has a beta of 0.86. If the stock sells for $31 per share, what is your best estimate of the company's cost of equity?
Complete the production cost report using weighted-average : Complete the production cost report using the weighted-average method. Yarmouth Company produces a liquid solvent in two departments
Which would be the closest to the annual magnitude : Which of the following would be the closest to the annual magnitude of the real appreciation (+) or real depreciation (-) of the CAD relative to NZD?
Procedures for issue of debenture in malaysia : What are the procedures for issue of debenture in malaysia?
Should the company accept the special order : What is the financial advantage (disadvantage) of accepting the special order from the wedding party? Should the company accept the special order

Reviews

Write a Review

Cost Accounting Questions & Answers

  How much will monthly profits increase or decrease

how much will monthly profits increase or decrease and what unit cost is relevant for establishing a minimum selling price for these units?

  How much could advertising be increased to earn a monthly

Assume that the company expects to sell 25,000 units next month, would you recommend that the company automate its operation? Explain

  What is break-even point in the number of lobster rolls sold

Johnny Mobile started a food truck business in 2017 by investing. What is the break-even point in the number of lobster rolls sold? In sales revenue ($)?

  How many shares of stock are owned directly

Their grandfather owns the remaining 100 shares of Sibling Corporation. How many shares of stock are owned directly and indirectly by Bob.

  What are differences between variable and absorption costing

What are the differences between variable and absorption costing? Why is variable costing not allowed for GAAP reporting? Which method is more useful for internal decision-making? Why? As a manager, which would you prefer? Why?

  Calculate the total equivalent units in ending inventory

Zahra uses weighted-average process-costing method. Calculate the total equivalent units in ending inventory for assignment of conversion costs?

  Prepare income statement using variable method

Prepare income statement using VARIABLE method. The information had been gathered for the year ended December 2019 from Rjfn manufacturing.

  What the components of total manufacturing cost are

What The 3 components of Total Manufacturing Cost are? What can be defined as the amount or percent by which sales can drop before losses begin

  Calculate the missing amounts - profit margin ratio

Sales declined over the 3-year fiscal period, 2010-2012. Does that mean that profitability necessarily also declined? Explain, computing the gross profit rate and the profit margin ratio for each fiscal year to help support your answer.

  Perform horizontal and vertical analysis

The condensed financial statements of Westward Corporation for 2009 and 2008 are presented below.

  Prepare the financial statements for studio photography

Prepare the financial statements for Studio Photography for the year ended December and statement of owners equity

  Prepare a schedule showing earnings in the department

Prepare a schedule showing earnings in the department the unit labour cost the unit overhead cost the total cost per unit (round unit cost)

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