User Account

All Pages

What is the cost of equity for the project

Assignment Help Accounting Basics
Reference no: EM133010592

Question - You are asked to use the CAPM to calculate the cost of equity for a company for use in project valuation. Assume that the project is roughly the same risk and duration as the company's existing projects, building construction projects making revenues from long-term lease contracts over several decades.

The annualized yield on 30-day treasury bills: 0.5%

The annualized yield on 30-year treasury bonds: 3.6%

The average market return from 1927-today: 11.6%

The forward looking market risk premium: 4%

Sample covariance of company stock with S&P500: 0.3

Sample variance of S&P500: 0.5

Required - What is the cost of equity for the project according to the CAPM?

Reference no: EM133010592

Questions Cloud

What amount should be recognized as gain : The entity made purchases of P20,000,000 in 2020. What amount should be recognized as gain on reversal of inventory write-down in 2020
By how much will x consolidated net income : If no consolidation elimination entries are prepared to eliminate this transaction, by how much will X's consolidated net income be overstated
What is the annual operating cash flow for the best-case : You feel that both sales and costs are accurate to +/-15 percent. The tax rate is 35 percent. What is the annual operating cash flow for the best-case scenario
Calculate the break-even point in units : Calculate the break-even point in units and in sales dollars (in total and per product) for XYZ. Assume a constant sales mix
What is the cost of equity for the project : You are asked to use the CAPM to calculate the cost of equity for a company for use in project valuation. What is the cost of equity for the project
Calculate the weighted average number of preferred shares : Drain Surgeon Company had 320,000 shares outstanding from January through March 2017. Calculate the weighted average number of preferred shares
Which of the general journal entries will able graphics make : Which of the general journal entries will Able Graphics make to record this transaction? Able Graphics received a $900 utility bill for the current month
Calculate the amount of total equity to be reported : At the end of its first month of operations, Calculate the amount of total equity to be reported on the balance sheet at the end of the month.
What is the sales mix variance for spiders : Creepers, Inc., manufactures stuffed spiders and mummies. During September the following information was gathered: What is the sales mix variance for Spiders

Reviews

Write a Review

Accounting Basics Questions & Answers

  What role does depreciation play in the cash budget

Describe the relationship of the Cash Budget to the Sales Budget. What role does Depreciation play in the Cash Budget

  Compute the average product cost of one patio set

The Dorilane Company produces a set of wood patio furniture consisting of a table and four chairs. Compute the average product cost of one patio set

  What amount should be debited to the patent account

Sandhill paid cash of $86000 to the seller. Legal fees of $1900 were paid related to the acquisition. What amount should be debited to the patent account

  What is the issue price of the bond

Seaside issues a bond with a stated interest rate of 10%, face value of $50,000, and due in 5 years. What is the issue price of the bond

  Prepare the journal entry to pay the liability

Prepare the journal entry to pay the liability at the end of 2017, assuming the actual cost is $31 million. Heinrich records an additional loss

  Problem associated to loss on the income statement

Betty's Bunny Barn has experienced a $40,000 loss due to tornado damage to their inventory. Tornados have never before occurred in this area. Assuming that the company's tax rate is 30%, what amount will be reported for this loss on the income sta..

  Determine the single plantwide factory overhead rate

The total factory overhead for Urban Styles, Inc., is budgeted for the year at $225,000. Determine the single plantwide factory overhead rate

  Merger co. has ten employees,

1.Merger Co. has ten employees, each of whom earns $ 2,000 per month and has been employed since January

  Discuss deitz corporation is projecting a cash balance

Deitz Corporation is projecting a cash balance of $37,620 in its December 31, 2016, balance sheet. Deitz's schedule of expected collections from customers

  How the amount of debt in the capital structure translates

In addressing this question, think about how the amount of debt in the capital structure translates into leverage and risk (volatility)

  Cane company manufactures two products called alpha and

cane company manufactures two products called alpha and beta that sell for 120 and 80 respectively. each product uses

  Decision making a list of relevant costs

Decision making, a list of relevant costs

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