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Question 1: The 90 day bank bill rate is quoted as 3.8 in the financial press. What is the correct cost of capital kbb to be used in the WACC calculation. Express as a number accurate to four places (to the nearest basis point). Do not enter the % sign (eg 5.5671% should be entered as .0557). Explain the process of answer.
Question 2: What is the cost of capital for bank overdraft (kbo). The overdraft rate is 5.4 % pa compounded 12 times a year? Answer as a percentage to two decimal places. Do not enter the % sign. Explain the process of answer.
Question 3: The next dividend for ABC Limited will be $0.5 per share (D1). Investors require a 10 % return on companies such as ABC Limited. ABC's dividend increases by 5 % every year. Based on the dividend growth model what is the value of ABC Limited shares today? Price to the nearest cent. Do not enter the $ sign. Explain the process of answer.
Question 4: Calculate the cost of equity capital using CAPM if the risk-free rate of interest is 5 per cent, the return on the market portfolio is 9 per cent, the beta of the firm's assets is .8 and the and beta of equity is 1.2. Provide your answer as a percentage to two decimal places. Do not enter the % sign. Explain the process of answer.
Question 5: Assume that A limited paid a dividend of 27.1 cents per share just recently. The shares currently sell for $10.3. You also estimate that the dividend will grow steadily at 2.8 % per year into the indefinite future. What is the cost of capital, ke for A limited? Answer as a percentage accurate to two decimal places. Do not enter the % sign. Explain the process of answer.
Purchasing Power Parity is an economic theory that estimates the amount of adjustment needed on the exchange rate between countries in order for the exchange to be equivalent to each currency's purchasing power. That is, the exchange rate adjusts so ..
If the firm earns a return on capital of 12.5%, and faces a 30% tax rate, please estimate the value/EBIT multiple for this firm.
4. Evaluate y our industry in terms of the five factors that determine an industry’s intensity of competition. Based on this analysis, what are your expectations about the industry’s profitability in the short run (1 or 2 years) and the long run (5 ..
The above earned value (EV) chart indicates that the project is:
Nagano NP-30.
Grady Home Health has a profit margin of 15 percent on sales of $20,000,000. If the firm has debt of $7,500,000 and total assets of $22,500,000, what is Grady's return on assets (ROA)?
ourteen years ago, the U.S. Aluminum Corporation borrowed $9.9 million. To sustain the original $9.9 million purchasing power, how much must the lender be repaid? (Hint: Multiply the loan amount by one plus cumulative inflation).
a japanese company has a bond outstanding that sells for 94 percent of its ?100000 par value. the bond has a coupon
Calculation of NPV and IRR of project and calculate IRR and use it to determine the maximum deviation allowable in the cost of capital estimate to leave the decision unchanged
Berta Industries stock has a beta of 1.30. The company just paid a dividend of $0.30, and the dividends are expected to grow at 4 percent. The expected return on the market is 13 percent, and Treasury bills are yielding 4.8 percent. The most recen..
Which way of financing is the cheapest (cost a firm least)? Which way of financing is the most expensive (cost a firm most)? Please rank these four ways of financing from the cheapest to the most expensive and discuss why.
Your neighbor just received a credit offer in an e-mail. The company is offering him $6,000 at 12.8 percent interest. The monthly payment is only $110. If he accepts this offer, how long will it take him to pay off the loan?
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