What is the cost of equity

Assignment Help Financial Management

Reference no: EM132068590

Gilbert & Sons is a levered firm. It has 300,000 shares of stock outstanding with a market price of $32 per share. The company also has $6.6 million of debt outstanding that sells at par. The pre-tax cost of debt is 9 percent and the unlevered cost of capital is 12 percent. What is the cost of equity if the tax rate is 35 percent?

Reference no: EM132068590

Questions Cloud

What is the estimated value per share of company stock : if the last dividend was $1.00, what is the estimated value per share of ABC Company's stock?

Bond portfolio immunization techniques balance : Bond portfolio immunization techniques balance _______ and ______ risk.

What is the NPV of this cost-cutting project : Kerfuffle Corporation is considering the purchase of a new computer system. What is the NPV of this cost-cutting project?

Dividend discount model and free cash flow valuation model : Discuss the nature of the numerators and denominators in the dividend discount model and the free cash flow valuation model.

What is the cost of equity : The pre-tax cost of debt is 9 percent and the unlevered cost of capital is 12 percent. What is the cost of equity if the tax rate is 35 percent?

Capital budgeting is process of analyzing potential projects : Capital budgeting is the process of analyzing potential projects. What does net present value (NPV) represent in capital budgeting analysis?

What does the lattice help to visually explain : explain the use of lattices in graphically explaining option valuation. What does the lattice help to visually explain?

What is the difference between call and put option : What is the difference between a call and a put option? what are three important inputs in the Black-Scholes option pricing model?

Elements of the weighted average cost of capital formula : Discus the three pairs of elements of the weighted average cost of capital formula.

User Account

All Pages