What is the maximum price

Assignment Help Finance Basics
Reference no: EM132395451

Firm A is considering to buy a building. It is estimated that the typical beta of real estate companies is 1.2. FirmAhas access to a risk-free rate of 6%. Currently, the expected market riskpremium is 8.2%. It is estimated that expect that the profit of the building will be $500,000. You expect the profit to grow indefinitely at 4% per year. What is the maximum price you recommendto be paid for the building?

Reference no: EM132395451

Questions Cloud

Discussion about the reflections on microcultures : Reflections on Microcultures: Submit here a reflection of the purpose of this assignment, how it will be used by you for this class, and its use for your.
Information governance and information management functions : Information Governance (IG) and Records and Information Management Functions. To further enhance our knowledge and understanding of RM,
What is the amount of accrued interest that james : What is the amount of accrued interest that James must pay to the seller of the bond?
Convert the values of dow jones and apple stock : Convert the values of Dow Jones and Apple stock price to the rate of return, then create X-Y scatterplot to show the relationship between the two rates of retur
What is the maximum price : You expect the profit to grow indefinitely at 4% per year. What is the maximum price you recommendto be paid for the building?
HOS802 Hospitality Management Simulations- Assignment : HOS802 Hospitality Management Simulations Assignment Help and Solutions, International College of Management, Sydney- Develop trategic business plan.
Define weighted average cost of capital : Define Weighted Average Cost of Capital and explain why a company must earn at least its Weighted Average Cost of Capital on new investments.
Discuss the role of the program administrator : Describe why the video above is an important resource for program administrators. Discuss the role of the program administrator in implementing DAP.
What is its return on stockholders equity : What is its return on stockholders' equity? (Do not round intermediate calculations. Input your answer as a percent rounded to 2 decimal places.)

Reviews

Write a Review

Finance Basics Questions & Answers

  What is the effective annual rate on the loan

Suppose Community Bank offers to lend you $10,000 for one year at a nominal annual rate of 8.00%, but you must make interest payments

  Analyze the case study frank smith plumbing

Explain why limited leverage is good for business. Show the profitability of the project so that Stephanie can convince her father to purchase the truck by borrowing money.

  Create the pro forma cash flow statement

When getting into a project of this type you generally consider a 5-year holding period and look for a 12% rate of return.

  Calculate the expected return on the stock

Assume Risk-free rate = 3%, Expected return on the market = 8%. Calculate the expected return on the stock if the beta is1. 02. 0.5

  What was your total return for the past year

If the bond had 17 years to maturity when you originally purchased it, what was your total return for the past year

  What should you do in given situation

You manufacture wine goblets (fine glassware) in the U.S. In mid-June you receive an order for 10,000 goblets from Japan.

  Compute the current price of this stock

After Careful analysis ,you have determined that a firm'a dividend should grow at 8%on average in the foreseeable future .Its last dividend was $4. Compute the current price of this stock ,assuming the required return is 18%.

  A company is considering creating and selling a new soda

a company is considering creating and selling a new soda. create a report explaining the research process that should

  Value of the position

The 1 month interest rate is 5%. What's the value of the position?

  Journalize the entries required for Gate City Cycles

Collecting a receivable previously written off-direct write-off method Gate City Cycles had trouble collecting its account receivable from Shawna Brown.

  Calculate the free cash flow

Calculate the free cash flow for year 0. What is the operating cash flow for Year 1?

  Calculate the length of the occ for the business

All purchases and sales are on credit. There has been no change in the level of receivables or payables over the period. Calculate the length of the OCC for the business and go on to suggest how the business may seek to reduce this period.

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