User Account

All Pages

What is its cost of common equity

Assignment Help Macroeconomics
Reference no: EM131952066

Empire Electric Company (EEC) uses only debt and common equity. It can borrow unlimited amounts at an interest rate of rd = 10% as long as it finances at its target capital structure, which calls for 25% debt and 75% common equity. Its last dividend (D0) was $2.95, its expected constant growth rate is 5%, and its common stock sells for $28. EEC's tax rate is 40%. Two projects are available: Project A has a rate of return of 14%, and Project B's return is 10%. These two projects are equally risky and about as risky as the firm's existing assets.

  1. What is its cost of common equity? Round your answer to two decimal places. Do not round your intermediate calculations.
  2. What is the WACC? Round your answer to two decimal places. Do not round your intermediate calculations.
  3. Which projects should Empire accept?

Reference no: EM131952066

Questions Cloud

Wacc for last dollar raised to complete expansion : What is the WACC for the last dollar raised to complete the expansion? Round your answer to two decimal places.
Create a worksheet that emphasizes phonological awareness : Describe the major concepts of beginning word study - What strategies from the video do you plan on applying to your instruction within the special education
What prediction would modernization theory support : Based on where we have been and where we are now, predict where the world may be a century from now.
Complete the skills assessment on the given website : Complete the Skills Assessment on the O*NET website and write a reflection essay explaining the potential benefits of the results in relation to your current.
What is its cost of common equity : What is its cost of common equity? Round your answer to two decimal places. Do not round your intermediate calculations.
How would you prioritize the problems of food production : Should environmental concerns be an issue in meeting the immediate needs of starving people? Can this choice be avoided? Explain
Create an essay on globalizations effects upon a country : Provide an overview of the selected country's place within the global community. State descriptive and demographic information.
Would you invest in tesla stock : Would you invest in Tesla stock, Why or why not ? What would be the benefit of buying Tesla stock when it is currently trading at 293$ a share.
How do you calculate the npv for each machine : The variable cost are 30 percent on the sales, and the fixed costs are $125,000 per year. The sales for the 2 machines will be $10 million per year.

Reviews

Write a Review

Macroeconomics Questions & Answers

  Taxes and other government related charges

If it is lower than the set price, it will create a producer surplus. How do you think the taxes and other government related charges play into the buying and selling prices?

  Develop strong relationships

Consultative selling has been known to develop strong relationships, making the salesperson almost an extension of the client's business. Why do you believe this is so?

  Charge on a marginal basis

If a fixed number of industrial polution permits are marketable; then we should just sell the right to smoke to highest bidders rather than ban smoking outright in many cities, restaurants, towns, business outlets, and bars.

  Determining the creative destruction

What is meant by the term "creative destruction"? How does the emergence of MP3 (or iPod) technology relate to this idea?

  The variables that determine a household budget line

Shaniq buys only soda and pizza and is buying the amounts that maximize her utility. The marginal utility from a soda is 30 and the price of a soda is $2. The marginal utility from a slice of pizza is also 30. The price of a slice of pizza must be

  What you need to know about three cultural differences

write a one- to two-page essay to describe what you need to know about three cultural differences that would help you open a subsidiary and hire staff.

  Increase in demand for nails

You are the manager of a small U.S. firm that sells nails in a competitive U.S. market (the nails you sell are a standardized commodity; stores view your mails as identical to those available from hundreds of other firms).

  Compute the opportunity cost and absolute advantage

You have the following information concerning the production of wheat and cloth in the United States and the United Kingdom:

  Can the observed pattern of income segregation be explained

Suppose that the income elasticity of demand for land is +0.75. The unit commuting cost (cost per mile) is the sum of monetary cost (30 cents per mile) and time cost (opportunity cost). Suppose that the typical commuter earns a wage

  After a nations not usa foreign-capital flows

After a nation's (not USA) foreign-capital flows are frozen, a large international supply of USD dollars shows up. What happens to the quantity of USD dollars demanded.

  Stimulate a higher growth rate of real output

Can expansionary monetary policy reduce interest rates and stimulate a higher growth rate of real output in the long run? Explai

  Calculate the annual netbenefits of raising

(a) Fitting a linear demand curve to the two observer points, calculate the annual netbenefits of raising the price of waste disposal to $0.05/lb.

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!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd