User Account

All Pages

What is the required rate of return on Oakfield Estate

Assignment Help Accounting Basics
Reference no: EM132938940

Question - Oakfield Estate Company has a total market value of £6 million, and the total value of its debt is £4 million. The treasurer estimates that the beta of the stock is currently 1.67 and that the expected risk premium on the market is 10 percent. The Treasury Bill rate is 4 percent. You are required to answer the following questions.

a. What is the required rate of return on Oakfield stocks?

b. What is the beta of the company's existing portfolio of assets? The debt is perceived to be virtually risk-free.

c. Estimate the weighted average cost of capital assuming a tax rate of 35 percent.

d. Estimate the discount rate for an expansion of the company's present business.

e. Oakfield Estate plc is considering diversifying by starting to grow and sell garden plants. The beta of the garden plant venture with no debt outstanding is 1.3. What is the required rate of return on Oakfield Estate plc's new venture?

Reference no: EM132938940

Questions Cloud

How you are going to coach employee : You have been assigned as Coach to a new employee who has been recently appointed as an Assistant Manager in the Administration department.
What is the gain on realization : The partners decide to liquidate their firm and they accordingly convert the non-cash assets into P11,600 cash. What is the gain (loss) on realization
Establish common standards for new technologies : It seems like whenever there's a new technology, whether it be a new way to deliver videos or music or a breakthrough in mobile phone or computer hardware, comp
What were initial thoughts on reading the aacn information : According to the AACN (2006), What were your initial thoughts on reading the AACN Information Systems/Technology Essentials for the DNP graduate?
What is the required rate of return on Oakfield Estate : The beta of the garden plant venture with no debt outstanding is 1.3. What is the required rate of return on Oakfield Estate plc's new venture
What is efficiency enhancing unionism : What is Efficiency Enhancing Unionism and under what conditions is effective? and why
Define a marketing orientation and a product orientation : 1. Is it possible to make sound managerial decisions without business research? What advantages does research offer to the decision maker over seat-of-the-pants
How do friends and community influence individual health : How do family, friends, and community influence individual health and lifestyle? Identify at least 3 positive and 3 negative effects.
What is the role of sourcing in the staffing process : 1) What is the role of sourcing in the staffing process? 2) What method/type of sourcing do you believe is most effective? Why?

Reviews

Write a Review

Accounting Basics Questions & Answers

  How much control does fed have over this longer real rate

Hubbard argues that the Fed can control the Fed funds rate, but the interest rate that is important for the economy is a longer-term real rate of interest.   How much control does the Fed have over this longer real rate?

  Coures:- fundamental accounting principles

Coures:- Fundamental Accounting Principles: - Explain the goals and uses of special journals.

  Accounting problems

Accounting problems,  Draw a detailed timeline incorporating the dividends, calculate    the exact Payback Period  b)   the discounted Payback Period. the IRR,  the NPV, the Profitability Index.

  Theory of interest - term structure of interest rates

Term Structure of Interest Rates

  Write a report on internal controls

Write a report on Internal Controls

  Prepare the bank reconciliation for company

Prepare the bank reconciliation for company.

  Cost-benefit analysis

Create a cost-benefit analysis to evaluate the project

  Theory of interest

Theory of Interest: NPV, IRR, Nominal and Real, Amortization, Sinking Fund, TWRR, DWRR

  Liquidity and profitability

Distinguish between liquidity and profitability.

  What is the expected risk premium on the portfolio

Your Corp, Inc. has a corporate tax rate of 35%. Please calculate their after tax cost of debt expressed as a percentage. Your Corp, Inc. has several outstanding bond issues all of which require semiannual interest payments.

  Simple interest and compound interest

Simple Interest, Compound interest, discount rate, force of interest, AV, PV

  Capm and venture capital

CAPM and Venture Capital

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