What is the firm required return

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Reference no: EM132018189

1. General Motors has a beta of 1.30 and the U.S. T-bill rate is 3.50%. The annual return on the stock market during the past 3 years was 15.00%, but investors expect the annual future stock market return to be 13.00%. Based on the SML, what is the firm's required return?

a. 12.51% b. 13.66% c. 14.21% d. 14.78% e. 15.85%

2. Based on the corporate valuation model, Liberty Media’s total corporate value is $1,200 million. The company’s balance sheet shows $120 million of notes payable, $300 million of long-term debt, $50 million of preferred stock, $180 million of retained earnings, and $800 million of total common equity. If the company has 30 million shares of stock outstanding, what is the best estimate of its price per share?

a. $21.90 b. $24.33 c. $26.77 d. $29.44 e. $32.39

Reference no: EM132018189

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