User Account

All Pages

What is the expected return on the share

Assignment Help Financial Accounting
Reference no: EM132962051

Questions -

A share is expected to pay an annual dividend of $2.53 next year, and this dividend is then expected to grow at a constant rate of 3.8% p.a. in perpetuity. If the required rate of return is 10.6% p.a., what is the value of the share?

You are trying to determine your firm's cost of debt capital. The only debt on the balance sheet is a series of bonds that the firm has issued. The bonds are not frequently traded, and therefore it is not possible to determine the market price.

The following table shows various debt ratings, along with an analyst's estimate of the credit spread for the ratings shown. Standard and Poor's have given your firm a AA(120) debt rating. The risk-free rate of return is 2.9% and the corporate tax rate is 30%. What is your firm's before-tax cost of debt capital?

A preference share pays a constant dividend of $1.64 and is currently priced at $17.98. The corporate tax rate is 30%. What is the before-tax cost of preference shares?

A share has a beta of 1.2. The risk-free rate of return is 4.0% and the risk premium is 10.3%. What is the expected return on the share?

A firm has three components in its capital structure: debt, preference shares and ordinary shares. The following table shows the before-tax cost of each component, along with its market value.?

Capital Component Cost of Capital Market Value

Debt 4.0% $114 million preference

Shares 7.2% $160 million

Ordinary Shares1 2.8% $488 million

The corporate tax rate is 30%. What is the firm's Weighted Average Cost of Capital?

Reference no: EM132962051

Questions Cloud

Employee relationship create risk and legal issues : How does the termination of the employer-employee relationship create risk and legal issues?
How much aryan needs to pay for the monthly installment : Calculate how much Aryan needs to pay for the monthly installment. Aryan is a fresh graduate who has just started working for two months
Varying levels of performance : Consider the organization you currently work for or one with which you are quite familiar. What type of performance review process do they have? How often do th
What percentage of accused of lying were falsely? accused : What percentage of those accused of lying were falsely? accused? The 1,980 employees of a company are given a polygraph test
What is the expected return on the share : A share has a beta of 1.2. The risk-free rate of return is 4.0% and the risk premium is 10.3%. What is the expected return on the share
What the racenational origin and provisions of title vii : Explain what the racenational origin and provisions of Title VII of the 1964 Civil Rights Act do and do not protect? How is race distinguished from national ori
Calculating hours worked-jack wilson : Please complete the bottom line indicating the time when the Time Sheet is due on your desk in accordance with the Payroll Procedures
How do we improve productivity in a national sense : What are some of the most important issues as it pertains to productivity improvement in the public sector?
Levels of job performance and job commitment : Recent meta -analyses have found that employees with higher quality exchange relationships have : O a greater number of grievances and lower productivity . high

Reviews

Write a Review

Financial Accounting Questions & Answers

  What the exercise of the options will result in a credit

On January 1, 2008, Milan Company granted share options, What the exercise of the 18,000 options will result in a credit to Share premium - excess over par of

  What is the total revenue reported by running treadmills

What is the total revenue reported by Running Treadmills in the month of January for this sale?

  Illustrate what is the correct journal entry for the sale

Did the accountant record the transaction correctly? Why would the Board of Directors want to show the gain? Are there any ethical issues involved? Illustrate what is the correct journal entry for the sale of the stock?

  Construct and use a cash budget

Nathan Farmer, chief financial officer of Wang Appliance Store, is responsible for the company’s budgeting process. Farmer’s staff is preparing the Wang cash budget for 2014. A key input to the budgeting process is last year’s statement of cash flows..

  Income tax bracket

“If you found yourself in the 91 percent income tax bracket in 1951, how great would have been your incentive to find legal loopholes to reduce your federal tax liabilities? If you found yourself in the lowest federal personal income tax bracket, say..

  Discuss the concept of value creation

Integrated reporting helps us provide a better picture of the total value. Discuss the concept of 'Value Creation', as described by the IIRC framework.

  Bknight trading has two divisions

BKnight Trading has two divisions, Penang and Ipoh, whose performance are under evaluation.

  What load factor does columbia air breakeven

ColumbiaAir Inc offers low cost air travel between Columbia, SC and NYC. ColumbiaAir's invested captial is $6,000,000, corresponding to the investment in the two planes the company owns. At what load factor does Columbia Air breakeven? (I.e. at what ..

  Was the overhead for the year over applied or under applied

ABC Corporation, which applies manufacturing overhead on the basis of machine-hours, has provided the following data for its year 2016 operations: When the difference in overhead is closed out to cost of goods sold (COGS), will it increase COGS or de..

  Make schedule showing the proposed correcting journal entry

Make schedule showing the proposed correcting journal entries assuming that the books have been closed for 2019. make a schedule showing the corrected

  Determine whether can use the financial statements of jonson

Research and cite a specific paragraph in the Accounting Standard Codification that can help Magic Co. to determine whether it can use the financial

  Accounting standards in the united states

What two bodies have authority to set accounting standards in the United States?

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