User Account

All Pages

What is the firms cost of equity

Assignment Help Financial Management
Reference no: EM131072097

wxMaxima Industries just paid an annual dividend of $1.44 a share. The market price of the stock is $24.62 and the firm promises a constant growth rate in dividends of 3.5 percent. What is the firm's cost of equity? (Enter rate in percents, not in decimals.)

Reference no: EM131072097

Questions Cloud

Extension of the firm current operations : Antonio's is analyzing a project with an initial cost of $41,000 and cash inflows of $26,000 a year for 2 years. This project is an extension of the firm's current operations and thus is equally as risky as the current firm. What is the projected net..
What is the projects free cash flow for year one : Racin scooters is introducing a new product and has an expected change in EBIT of $475,000. R.Scooters has a 34% marginal tax rate. With the project: 80,000 Accounts Payable without the project: 70,000; With the project: 94,000 What is the project's ..
Debt-equity ratio-what is company cost of equity capital : Twice Shy Industries has a debt−equity ratio of 1.6. Its WACC is 8.6 percent, and its cost of debt is 6.1 percent. The corporate tax rate is 35 percent. What is the company’s cost of equity capital? What would the cost of equity be if the debt−equity..
What would your pre-tax net profit be : Suppose you believe that Florio Company's stock price is going to decline from its current level of $82.50 sometime during the next 5 months. For $5.10 you could buy a 5-month put option giving you the right to sell 1 share at a price of $85 per shar..
What is the firms cost of equity : wxMaxima Industries just paid an annual dividend of $1.44 a share. The market price of the stock is $24.62 and the firm promises a constant growth rate in dividends of 3.5 percent. What is the firm's cost of equity?
How does this change your overall return on investment : Suppose you invest $10,000 in a savings account earning 2% interest (compounded yearly) with no risk. After 7 years, how much will you have? How does this change your overall return on investment?
About the security market line : The security market line (SML) is an equation that shows the relationship between risk as measured by beta and the required rates of return on individual securities. If inflation increases by 1% but there is no change in investors' risk aversion, wha..
Risk is important concept affecting security prices : Risk is an important concept affecting security prices and rates of return. Risk is the chance that some unfavorable event will occur, and there is a trade-off between risk and return. The higher an investment’s risk, the equivalent Item 1 the return..
What is the constant annual-equivalent cash flow : A new furnace will cost $27,000 to install and will require maintenance of $1,500 a year. But it is more efficient than your old furnace and will reduce your heating oil consumption by 2400 gallons per year. What is the payback period and discounted ..

Reviews

Write a Review

Financial Management Questions & Answers

  Would you argue that the cost of equity should be zero

Would you argue that the cost of equity should be zero? After all, we can determine our own dividend policy. The amount of earnings we choose to keep in the business (i.e., retained earnings after paying dividends) is "free", right?

  Considering the introduction of a new product line

Your company is considering the introduction of a new product line. The initial investment required for this project is $500,000, and annual maintenance costs are anticipated to be $35,000. Annual operating cost will be directly in proportion to the ..

  What is the market value of this stock if dividends grow

Nyeil, Inc., is a consumer products firm that is growing at a constant rate of 4.0 percent. The firm’s last dividend was $3.36. If the required rate of return is 20.0 percent, what is the market value of this stock if dividends grow at the same rate ..

  No dividends will be paid on stock over the next nine year

Metallica Bearings, Inc., is a young start-up company. No dividends will be paid on the stock over the next nine years because the firm needs to plow back its earnings to fuel growth. The company will pay a $14 per share dividend 10 years from today ..

  Which machine should be purchased and why

You require a new machine for 20 years. Machine A lasts 5 years and Machine B lasts 4 years. Machine A costs $13,000 and Machine B costs $11,000. The salvage value of Machine A is $3,000 and the salvage value of Machine B is $4,000. Annual O&M costs ..

  Worth of foreign currency in exchange for deposit accounts

Suppose the Federal Reserve purchases $10 billion worth of foreign currency in exchange for deposit accounts at the Federal Reserve. Show the changes that result from this transaction on the Fed's balance sheet.

  In a discounted cash flow analysis

Giant Corp. is considering a project that requires a $1,500 initial cost for a new machine that will be depreciated straight line to a salvage value of 0 on a 5-year schedule. The project will require a one-time increase in the level of net working c..

  Management is considering purchasing new machine

Kingston, Inc. management is considering purchasing a new machine at a cost of $4,408,526. They expect this equipment to produce cash flows of $757,564, $830,902, $1,026,664, $1,059,322, $1,217,327, and $1,289,435 over the next six years.

  What is the value of this bond to an investor

A $1,000 bond is issued with a coupon rate of 8 percent and 20 years to maturity five years ago. If this bond pays interest semi-annually, what is the value of this bond (TODAY) to an investor who requires an 8 percent rate of return?

  Manages endowments and trusts for large clients

Gordon Powles works for Creighton Capital Management and manages endowments and trusts for large clients. The fund invests most of its portfolio in S&P 500 stocks, keeping some cash to facilitate purchases and withdrawals. A colleague of Powles, Mari..

  Which type of intellectual property is involved in situation

College Copy Shop (CCS) compiles, copies, and sells reading materials to students. The compilations are prepared on the instructions of professors, who indicate which parts of which publications should be included for their students. Which type of in..

  Globalism trend affect cost and benefit analysis

Can ethics as it relate to technology be taught at CanGo? Why or why not? How does the globalism trend affect CanGo cost/benefit analysis?

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