What is the appropriate cost for retained earnings

Assignment Help Financial Management

Reference no: EM131452003

Samsung is trying to determine the appropriate cost for retained earnings to be used in capital budgeting analysis. The firm's beta is 2.47. The rate on six-month T-bills is 3.03% and the return on the S&P 500 index is 9.51%. What is the appropriate cost for retained earnings in determining the firm's cost of capital?

Reference no: EM131452003

Questions Cloud

Dividend preference theory to explain action of real firm : Use Dividend Preference Theory to explain the action of a real firm?

What is the firms degree of operating leverage : What is the firm's degree of operating leverage in going from a recession to a strong economy?

Residual income value-relevant to common equity shareholders : Why is residual income value-relevant to common equity shareholders?

What does residual income represent : What does residual income represent? What is the relevance of book value of common equity in the residual valuation approach?

What is the appropriate cost for retained earnings : What is the appropriate cost for retained earnings in determining the firm's cost of capital?

Loan contract with re-payment schedule : Calculate your monthly payments for the next 7 years. What is the maximum prepayment fee that you would pay to accept the deal?

Social media has changed your daily life : What are some ways that social media has changed your daily life? What can marketers take advantage of for their promotional purposes?

Combines the risk-free asset and the market portfolio : A portfolio P that combines the risk-free asset and the market portfolio has an expected return of 14% and a return standard deviation of 18%.

Treasury interest rate-afford to make the monthly payments : How much can the 10-year treasury interest rate increase before you can’t afford to make the monthly payments?

User Account

All Pages