What is the required rate of return for msft

Assignment Help Financial Management
Reference no: EM131346299

Using the CAPM, what is the required rate of return for MSFT?

Return on the market portfolio (SPY) and the risk free rate Rf is given below:

Use Yahoo. Finance MSFT beta estimate: b = 1.044; assume RSPY = 10% (based on 40+ years of historical data); and a risk-free rate of Rf = 4.0% (i.e., based on L-T inflation rate of 3.0% and real return of 1.0%).

Reference no: EM131346299

Questions Cloud

Result of your ownership of myron stock : On July 14, you purchased 1,500 shares of Myron stock. On August 1, you sold 500 shares of this stock for $16 a share. You sold an additional 300 shares on August 18 at a price of $18 a share. How much dividend income will you receive on August 31 as..
What are the two primary ways companies raise common equity : What are the two primary ways companies raise common equity? Please elaborate. Should the component costs of a company be figured on a before-tax or an after-tax basis? Why?
The primary payer for acute-care services : Which of the following is the primary payer for acute-care (hospital) services? If stock ABC has a mean return of 10 percent with a standard deviation of 5 percent, then the probability of earning a return greater than 15 percent is about ___ percent..
What are portfolio weights for portfolio : What are the portfolio weights for a portfolio that has 135 shares of Stock A that sell for $84 per share and 110 shares of Stock B that sell for $82 per share?
What is the required rate of return for msft : Using the CAPM, what is the required rate of return for MSFT?
What is the firm market value capital structure : Titan Mining Corporation has 8.7 million shares of common stock outstanding and 230,000 6.4 percent semiannual bonds outstanding, par value $1,000 each. What is the firm’s market value capital structure?
How much in total will you receive from the sale : The board of directors of DDT Inc. declared a dividend of $0.75 per share payable on Monday, January 28 to shareholders of record as of Monday, January 14. You owned 500 shares of DDT on Wednesday, January 9 when the price was $7.50 per share. Assumi..
Market imperfections or tax effects exist : ACE currently has 350,000 shares of stock outstanding that sell for $76 per share. Assuming no market imperfections or tax effects exist, what will the share price and the total number of shares after each of the following? ACE has a four-for-five re..
What is the value of levered firm : An unlevered firm has a cost of capital of 14% and earnings before interest and taxes of $150,000. A levered firm with the same operations and assets has both a book value and a face value of debt of $700,000 with a 7% annual coupon. The applicable t..

Reviews

Write a Review

Financial Management Questions & Answers

  Estimate of the firms current cash conversion cycle

You have recently been hired to improve the performance of T Corporation which has been experiencing a severe cash shortage. As one part of your analysis, you want to determine the firm's cash conversion cycle. Using the following information and a 3..

  Assume perfect capital markets and no taxation

A company's debt is given by a bond that will mature in two years. After two years the company will terminate all activity. The company unlevered equity value in two years can be $17 millions with a 50% probability or $14 millions with probability 50..

  The present value of future cash flows increases

Holding all other variables constant, payment per period for an annuity due will be higher than an ordinary annuity. As the discount rate increases, the present value of future cash flows increases.

  Planning to save for retirement-withdrawal period

You are planning to save for retirement over the next 35 years. To do this, you will invest $900 per month in a stock account and $500 per month in a bond account. The return of the stock account is expected to be 11 percent, and the bond account wil..

  Firms stock price on the announcement date

ABC Corp is a public company and announces its intention to raise $300 million by selling new shares. What do market signaling studies suggest will happen to the firm's stock price on the announcement date? Why?

  What return should you expect from topical

You have recently purchased stock in Topical Inc. which has returned between 5% and 9% over the last three years. Your friend, Bob, has criticized your purchase and insists that you should have invested in Combs Inc., as he did, because it's been ret..

  What type of nominal rate-of-return-retirement savings

Suppose that you get married after graduating with your undergraduate degree. During your working years, your household makes an average annual income of $100,000. How many years does your household plan to work? This is a number you must specify. Wh..

  Change in the bond’s price in percentage

A $1,700 face value corporate bond with a 5.6 percent coupon (paid semiannually) has 12 years left to maturity. It has had a credit rating of BBB and a yield to maturity of 7.9 percent. The firm has recently gotten into some trouble and the rating ag..

  What is pretax cost of debt and aftertax cost of debt

Waller, Inc., is trying to determine its cost of debt. The firm has a debt issue outstanding with 9 years to maturity that is quoted at 100 percent of face value. The issue makes semiannual payments and has an embedded cost of 9 percent annually. Wha..

  Leasing restatements in the restaurant industry

"Leasing Restatements in the Restaurant Industry" Please respond to the following: From the case study, create an argument for the use of principles-based accounting for leases over rules-based accounting under GAAP, based on the financial statement ..

  Same features as the energy efficient model

You are in the market for a new refrigerator for your company’s lounge. You have narrowed the search down to 2 models. The energy efficient model sells for $700 and will save you $45 at the end of each of the next 5 years in electricity costs. The st..

  Sensitive is OCF to changes in quantity sold

Consider a three-year project with the following information: initial fixed asset investment = $710,000; straight-line depreciation to zero over the four-year life; zero salvage value; price = $34.75; variable costs = $22.90; fixed costs = $213,500; ..

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