Already have an account? Get multiple benefits of using own account!
Login in your account..!
Remember me
Don't have an account? Create your account in less than a minutes,
Forgot password? how can I recover my password now!
Enter right registered email to receive password!
Q. Estimate the systematic risk of the new investment?
The beta of the comparator company will be utilized to estimate the systematic risk of the new investment. No un-gearing is essential as the asset beta of the comparator company is given. This will require to be regarded to take into account the capital structure of our company.
Re-gearing
Beta equity = beta asset*E + D(1- t))/ E
Beta equity = 0·90 *214 + 85(1- 0.3))/ 214= 1.15
Using the capital asset pricing model
ke = Rf + (Rm - Rf) beta = 6% + (14% - 6%) 1·15 = 15·20%
Cost of debt
This remains at 3·60%
Market value of equity $214m
Market value of debt $85m
Weighted average cost of capital
15·20% *214/299+ 3·60% *85/299= 11·90%
The discount rate to be utilized in the investment appraisal when diversifying into the new industry is 11·90%
Q. Determine the indicated market price per share? Your company's share is quoted in the market at Rs.20 Presently. The company pays a dividend of Rs.1 per share and the invest
Q. Show the Capitalized Cost? Capitalized Cost - Expenditure identified with services or goods acquired and measured by theamount of cash paid or market value of other property
State the types of business organizations There are numerous types of business organizations: Service business-doctors, lawyers, barber shop etc. Merchandising busin
1) Which inventory methods are used by Lowe's? (Mark all that apply.) a. Weighted-average b. FIFO c. LIFO d. Dollar-value LIFO e. Retail LIFO f. Retail Dollar-value LIFO g. If mult
A quick glance at the trend in the Operating and Net Profit Margin figure indicates an improvement in the margins over the 2 year period. As is evident from the graph above HAIL du
Creation An express trust is "created not by facts and circumstances, but by the express words of the settlor". (Fitzgerald v Stewart) It may be created in the following ways:
Powers of trustee (A) Of his own initiative, he may: 1. Sell and transfer any part of the bankrupt's property; 2. Gives receipts for money received; 3. Take all n
FINAL ACCOUNTS As pension funds are set up for a specific purpose, and not for trading, we do not prepare the normal trading profit and loss account or the balance sheet. The p
Dividends out of the capital profits Dividends out of the capital profits are apportioned on the same basis as dividends out of income (Re. Doughty). (a) Variation of sec
Suppose that the real risk-free rate, r*, is 4% and that inflation is usual to be 8% in Year 1, 5% in Year 2, and 4% thereafter. Suppose also that all Treasury securities are highl
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!
whatsapp: +1-415-670-9521
Phone: +1-415-670-9521
Email: [email protected]
All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd