The equity beta of a firm that is financed with 45% debt and 55% equity is...
The equity beta of a firm that is financed with 45% debt and 55% equity is 1.1. The beta of the debt is 0.3. The expected return on the market is 11%, and the risk -free rate is 3%. What rate of return should this firm require on its projects? I get 12.1% but the following are the options:
A. 14%
B. 8.9%
C. 15.1%
D. -36.5%
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The equity beta of a firm that is financed with 45% debt and 55%
equity is...
Assume a firm is financed with $7500 debt and $2500 equity. The beta of the equity is 1.1. The risk-free rate is 3%, and...
Assume a firm is financed with $7500 debt and $2500 equity. The beta of the equity is 1.1. The risk-free rate is 3%, and the equity premium is 6%. If the overall cost of capital of the firm is 8%, what is the beta of the firmʹs debt? 0.74 0.14 0.28 0.92
Gamma Biosciences is financed entirely with equity. Its beta is 1, and its price-earnings ratio is...
Gamma Biosciences is financed entirely with equity. Its beta is 1, and its price-earnings ratio is 13. The current risk-free rate is 6 percent, and the expected return on the market is 12 percent. Round your answers to one decimal place. What rate of return should the company require on projects of average risk? % If a new project has a beta of 1.3, what rate of return should the company require? %
The Consolidated Transfer Co. is an all-equity financed firm. The beta is .75, the market risk...
The Consolidated Transfer Co. is an all-equity financed firm. The beta is .75, the market risk premium is 7.78 percent and the risk-free rate is 3.84 percent. What is the expected return on Consolidated stock? 8.46% 9.54% 9.68% 6.80% 8.22%
A company is financed for 30% of its capital with debt and the rest with equity....
A company is financed for 30% of its capital with debt and the rest with equity. debt is risk free, so it’s beta is B=0 and its cost is risk free rate rf. Equity has a beta of Be=2 1. What is the firms asset beta. 2. Asume CAPM is correct. What is the cost of capital for the firm? Assume risk free interest of 5% and market risk premium of 6%
Problem 9 You are given the following information about a firm and the equity-debt structure of...
Problem 9 You are given the following information about a firm and the equity-debt structure of this firm: i) The amount of long-term outstanding debt is 150,000. ii) The debt is risk-free and is financed at an interest rate of 7%. iii) Number of shares of common stock is 40,000. iv) The price per share is 15. v) The stock's beta is 1.2. vi) The expected market return is 14%. Calculate the firm's before-tax cost of capital.
Blossom Corporation is financed with debt, preferred equity, and common equity with market values of $22...
Blossom Corporation is financed with debt, preferred equity, and common equity with market values of $22 million, $14 million, and $33 million, respectively. The betas for the debt, preferred stock, and common stock are 0.2, 0.4, and 1.1, respectively. The risk-free rate is 3.99 percent, the market risk premium is 6.07 percent, and Blossom’s average and marginal tax rates are both 30 percent.
9. AllCity, Inc., is financed 45% with debt, 13% with preferred stock, and 42% with common...
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AllCity, Inc., is financed 39 % with debt, 5 % with preferred stock, and 56 %...
AllCity, Inc., is financed 39 % with debt, 5 % with preferred stock, and 56 % with common stock. Its cost of debt is 5.6 %, its preferred stock pays an annual dividend of $ 2.48 and is priced at $ 30. It has an equity beta of 1.1. Assume the risk-free rate is 2.5 %, the market risk premium is 6.6 % and AllCity's tax rate is 35 %. What is its after-tax WACC? Note: Assume that the firm...
17. SML and WACC [LO1] An all-equity firm is considering the following projects: Project Beta IRR...
17. SML and WACC [LO1] An all-equity firm is considering the following projects: Project Beta IRR W 8.9% X .85 .92 1.09 1.35 10.8 12.8 < 13.3 N The T-bill rate is 4 percent, and the expected return on the market is 11 percent. a. Which projects have a higher expected return than the firm's 11 percent cost of capital? b. Which projects should be accepted? c. Which projects would be incorrectly accepted or rejected if the firm's overall cost...
3)Suppose a cashless firm A has equity beta of 2, asset beta of 1, then its...
3)Suppose a cashless firm A has equity beta of 2, asset beta of 1, then its debt to equity ratio is ____ . 4)Suppose the asset beta of a firm is 1, ND/E ratio is 1, risk free rate is 1%, market risk premium is 5%. Calculate the expected return of your firm for new investors. Enter the return of your firm for new investors _____% 5)Firm A is not listed, and you use comparable method to calculate its beta....
Problem 9 You are given the following information about a firm and the equity-debt structure of this firm: i) The amount of long-term outstanding debt is 150,000. ii) The debt is risk-free and is financed at an interest rate of 7%. iii) Number of shares of common stock is 40,000. iv) The price per share is 15. v) The stock's beta is 1.2. vi) The expected market return is 14%. Calculate the firm's before-tax cost of capital.
9. AllCity, Inc., is financed 45% with debt, 13% with preferred stock, and 42% with common stock. Its cost of debt is 6.3%, its preferred stock pays an annual dividend of $2.47 and is priced at $30. It has an equity beta of 1.15. Assume the risk-free rate is 2.2%, the market risk premium is 7.3% and AllCity's tax rate is 35%. What is its after-tax WACC? Note: Assume that the firm will always be able to utilize its full...
17. SML and WACC [LO1] An all-equity firm is considering the following projects: Project Beta IRR W 8.9% X .85 .92 1.09 1.35 10.8 12.8 < 13.3 N The T-bill rate is 4 percent, and the expected return on the market is 11 percent. a. Which projects have a higher expected return than the firm's 11 percent cost of capital? b. Which projects should be accepted? c. Which projects would be incorrectly accepted or rejected if the firm's overall cost...
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