What is the expected return of wt stock without? leverage

Assignment Help Finance Basics
Reference no: EM131533146

Wolfrum Technology? (WT) has no debt. Its assets will be worth ?$468 million one year from now if the economy is? strong, but only ?$265 million in one year if the economy is weak. Both events are equally likely. The market value today of its assets is ?$291 million.

a. What is the expected return of WT stock without? leverage?

b. Suppose the? risk-free interest rate is 5 %. If WT borrows ?$99 million today at this rate and uses the proceeds to pay an immediate cash? dividend, what will be the market value of its equity just after the dividend is? paid, according to? MM?

c. What is the expected return of WT stock after the dividend is paid in part ?(b?)?

Reference no: EM131533146

Questions Cloud

Discuss the concept of journal entries : Prepare journal entries to record the following merchandising transactions of Wave Company, which applies the perpetual inventory system.
The firm pays out all earnings as dividends : The firm pays out all earnings as dividends; What is the total corporate value? What is the firm's WACC?
What is the company cost of capital : a. What is the company cost of capital? What is the after-tax WACC, assuming that the company pays tax at a 35% rate?
How would you explain the chicken-egg conundrum : How would you explain the "chicken-egg" conundrum as to which disorder came first, the mental illness or the addiction?
What is the expected return of wt stock without? leverage : a. What is the expected return of WT stock without? leverage?
Equilibrium price of risk in terms of expected return : The slope of the capital market line is the equilibrium price of risk in terms of expected return.
Telecommunications and network security : Topic: TELECOMMUNICATIONS AND NETWORK SECURITY. An evaluation of the pros and cons associated with each of the options presented to the user
How do this year results compare to prior years results : Prepare closing entries as of August 31, 2011 (the perpetual inventory system is used). Analysis Component
Calculate the etc and eac for the project : calculate the ETC and EAC for the project. Will the client be pleased or angry?

Reviews

Write a Review

Finance Basics Questions & Answers

  Financial reporting and analysis

Finance is about Gunns Ltd, a company in dealing with forestry products in Australia. The company has also been listed in Australian Stock Exchange. As many companies producing forestry products, even Gunns Ltd is facing various problems. Due to the ..

  A report on financial accounting

This report is specific for a core understanding for Financial Accounting and its relevant factors.

  Describe the types of financial ratios

Describe the types of financial ratios and other financial performance measures that are used during venture's successful life cycle.

  Differences between sole proprietorship and corporation

Briefly describe the major differences between a sole proprietorship and a corporation

  Prepare a cash budget statement

Calculate the expected value of the apartment in 20 years' time. What is the mortgage loan repayment at the beginning of each month

  What are the implied interest rates

What are the implied interest rates in Europe and the U.S.?

  State pricing theory and no-arbitrage pricing theory

State pricing theory and no-arbitrage pricing theory

  Small business administration

Identify the likely stage for each venture and describe the type of financing each venture is likely to be seeking and identify potential sources for that financing.

  Effect of financial leverage

The Effect of Financial Leverage and working capital management

  Evaluate the basis for the payment to the lender

Evaluate the basis for the payment to the lender and basis for the payment to the company-counterparty.

  Importance of opps, ipps, mpfs and dmepos

Research and discuss the differences and importance of : OPPS, IPPS, MPFS and DMEPOS.

  Time value of money

Time Value of Money project

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!

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