Reference no: EM131354504
Cost of Common Equity
The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 5% per year. Callahan's common stock currently sells for $26.25 per share; its last dividend was $1.80; and it will pay a $1.89 dividend at the end of the current year.
Using the DCF approach, what is its cost of common equity? Round your answer to two decimal places. Do not round your intermediate calculations.
%
If the firm's beta is 1.50, the risk-free rate is 5%, and the average return on the market is 14%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places.
%
If the firm's bonds earn a return of 10%, based on the bond-yield-plus-risk-premium approach, what will be rs? Use the midpoint of the risk premium range discussed in Section 10-5 in your calculations. Round your answer to two decimal places.
%
If you have equal confidence in the inputs used for the three approaches, what is your estimate of Callahan's cost of common equity? Round your answer to two decimal places. Do not round your intermediate calculations.
%
|
Expected cash inflows
: Project L costs $65,000, its expected cash inflows are $13,000 per year for 6 years, and its WACC is 10%. What is the project's payback?
|
|
Capital structure weight of equity on market value basis
: Filer Manufacturing has 8.6 million shares of common stock outstanding. The current share price is $48, and the book value per share is $4. Filer Manufacturing also has two bond issues outstanding. What is Filer's capital structure weight of equity o..
|
|
Under what circumstances will the put option be exercised
: Suppose that a European put option to with a strike price price of $70 costs $5 and is held until expiration. Under what circumstances will the put option be exercised? Under what circumstances the seller of the put option make a profit?
|
|
Capital structure consists solely of debt-common equity
: Hook Industries' capital structure consists solely of debt and common equity. It can issue debt at rd = 11%, and its common stock currently pays a $3.25 dividend per share (D0 = $3.25). The stock's price is currently $21.25, its dividend is expected ..
|
|
What is its cost of common equity
: The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 5% per year. Callahan's common stock currently sells for $26.25 per share; its last dividend was $1.80; and it will pay a $1.89 dividend at the ..
|
|
What is your estimate of callahan cost of common equity
: The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 5% per year. Callahan's common stock currently sells for $26.25 per share; its last dividend was $1.80; and it will pay a $1.89 dividend at the ..
|
|
What will that do to our sourcing costs
: Assume the exchange rate is such that a US dollar is currently worth A$1.15 (A$ is Australian dollars). If a company is sourcing materials from Australia and is contracted to pay A$27.5 million next year, what is that equivalent in US dollars? What w..
|
|
Well-diversified portfolio of high-quality-large-cap stocks
: Nick Fitzgerald holds a well-diversified portfolio of high-quality, large-cap stocks. The current value of Fitzgeralds portfolio is $735,000, but he is concerned that the market is heading for a big fall (perhaps as much as 20%) over the next three t..
|