What is the opportunity cost of capital

Assignment Help Financial Management
Reference no: EM13913737

Eastern Electric currently pays a dividend of about $1.96 per share and sells for $33 a share.

If investors believe the growth rate of dividends is 4% per year, what is the opportunity cost of capital?

If investors' opportunity cost of capital is 10%, what must be the growth rate they expect of the firm?

If the sustainable growth rate is 5% and the plowback ratio is .5, what must be the return on equity ROE?

Reference no: EM13913737

Questions Cloud

How long will it take her to pay off the debt : Phoebe realizes that she has charged too much on her credit card and has racked up $5,700 in debt. If she can pay $200 each month and the card charges 18 percent APR (compounded monthly), how long will it take her to pay off the debt?
Amanda company had a negative balance : As of June 30, 2012 (the computation date for the 2013 tax rate), Amanda Company had a negative balance of $1,015 in its unemployment reserve account in State A.
Rental property that is leased : If you have a rental property that is leased for $1,000 a month for the next 20 years, what could an investor pay for the property if their required rate of return was 11% (assume rent is collected at the end of each month)?
How is the irs able to determine the amount of tips : Anita Leland, a waitress in Atlantis Casino, reported tips of $467 to her employer last year. Two months after she filed her federal income tax return, Leland received a letter from the IRS informing her that she had earned $5,260 in tips rather than..
What is the opportunity cost of capital : Eastern Electric currently pays a dividend of about $1.96 per share and sells for $33 a share. If investors believe the growth rate of dividends is 4% per year, what is the opportunity cost of capital? If investors' opportunity cost of capital is 10%..
Discontinued operations : discontinued operations-extraordinary items earnings per share date
Machine models are being considered for ongoing operation : Three alternative machine models are being considered for an ongoing operation. The three alternatives will be used in the production of the same product. Therefore, the selection among the three will be based on total costs.
Find the amount of work done by the boy : A body of mass m1 standing on a smooth plane of ice throws a ball of mass m2 horizontally on the surface of ice. If x be the distance between them after a time t, then find the amount of work done by the boy in throwing the ball?
Break-even financial : It will cost $3000 per year to maintain the vehicle, which includes all relevant costs. How much will the WCHC need in foundation grants this year to make the purchase break-even financial

Reviews

Write a Review

Financial Management Questions & Answers

  Pretax cost savings-computer-based order entry system

Your firm is contemplating the purchase of a new $565,000 computer-based order entry system. The system will be depreciated straight-line to zero over its five-year life. It will be worth $57,000 at the end of that time. You will be able to reduce wo..

  In case of bankruptcy

In case of bankruptcy, who will typically receive the firm's liquidated assets in which order?

  Salary increases at an average annual rate

Upon graduating from college, you make an annual salary of $78,800. You set a goal to double it in the future. If your salary increases at an average annual rate of 3.45 percent, how long will it take to reach your goal?

  What is the expected return on the market

What is the expected return on the market and What is the risk-free rate?

  Dividends are expected to grow at constant rate

The Jackson–Timberlake Wardrobe Co. just paid a dividend of $1.10 per share on its stock. The dividends are expected to grow at a constant rate of 5 percent per year indefinitely. Investors require a return of 11 percent on the company's stock. What ..

  What must the risk-free rate be

A stock has an expected return of 15.5 percent, a beta of 1.50, and the expected return on the market is 12.1 percent. What must the risk-free rate be?

  What is the price of each stock-expected capital gains yield

You will analyze three different stocks, all of which have a required return of 10% and a most recent dividend of $4.50 per share. Stocks A, B, and C are expected to maintain constant growth rates in dividends for the foreseeable future of 6%, 0%, an..

  Suppose that two-year interest rates are 52 in the united

suppose that two-year interest rates are 5.2 in the united states and 1.0 in japan. the spot exchange rate is 120.22.

  Investors expect the annual future stock market return

Brodkey Shoes has a beta of 1.10, the T-bond rate is 5.5%. 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 14.00%. Based on the SML, what is the firm's require..

  Probability distributions of expected future returns

Stocks X and Y have the following probability distributions of expected future returns: Probability X Y 0.1 -14% -35% 0.2 3 0 0.3 16 22 0.3 22 27 0.1 39 40. Calculate the expected rate of return, rY, for Stock Y (rX = 14.50%.)

  There are two questions on financial planningq why do you

there are two questions on financial planning.q why do you think most long term financial planning begins with the

  What is the price of a call option with strike price

What is the price of a call option with strike price K = 375

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