Rivoli Inc. hired you as a consultant to help estimate its cost of capital. You have been provided with the following data: D0 = $0.80; P0 = $77.50; and g = 8.00% (constant). Based on the DCF approach, what is the cost of equity from retained earnings?
Group of answer choices
8.66%
7.20%
10.12%
9.11%
10.30%
Malholtra Inc. is considering a project that has the following cash flow and WACC data. What is the project's MIRR? Note that a project's MIRR can be less than the WACC (and even negative), in which case it will be rejected.
WACC: | 10.00% | ||||
Year | 0 | 1 | 2 | 3 | 4 |
Cash flows | -$850 | $300 | $320 | $340 | $360 |
Group of answer choices
14.08%
15.65%
17.21%
18.94%
20.83%
Last month, Lloyd's Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project, the Federal Reserve took actions that changed interest rates and therefore the firm's WACC. The Fed's action did not affect the forecasted cash flows. By how much did the change in the WACC affect the project's forecasted NPV? Note that a project's projected NPV can be negative, in which case it should be rejected.
Old WACC: | 10.00% | New WACC | 12.50% | |
Year | 0 | 1 | 2 | 3 |
Cash flows | -$1,000 | $410 | $410 | $410 |
Group of answer choices
-$43.26
-$39.80
-$48.02
-$47.15
-$44.12
1)
Cost of equity =D1/P0+g
=(0.80*1.08)/77.50+8%
=9.11%
2)
3)
Rivoli Inc. hired you as a consultant to help estimate its cost of capital. You have...
Rivoli Inc. hired you as a consultant to help estimate its cost of equity. You estimate the beta of the company at 1 and the current risk-free rate and the market rate at 2% and 10% respectively. What is the approximate cost of equity for the company?
Rivoli Inc. hired you as a consultant to help estimate its cost of common equity. You have been provided with the following data: D0 = $0.80; P0 = $22.50; and g = 8.00% (constant). Based on the DCF approach, what is the cost of common from retained earnings? Answer 10.69% 11.25% 11.84% 12.43% 13.05%
1) Last month, Standard Systems analyzed the project whose cash flows are shown below. However, before the decision to accept or reject the project took place, the Federal Reserve changed interest rates and therefore the firm's cost of capital (r). The Fed's action did not affect the forecasted cash flows. By how much did the change in the r affect the project's forecasted NPV? Note that a project's expected NPV can be negative, in which case it should be rejected....
Teall Development Company hired you as a consultant to help them estimate its cost of capital. You have been provided with the following data: D1 = $1.45; P0 = $26.00; and g = 6.50% (constant). Based on the DCF approach, what is the cost of equity from retained earnings? Group of answer choices 12.68% 11.84% 12.08% 10.63% 9.78%
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