Homework Answers
Cost of equity capital = Risk-free rate + Beta(Market return - Risk-free rate)
Verizon:
Cost of equity capital = 0.0132 + 0.56(0.105 - 0.0132) = 0.0646 or 6.46%
Amazon:
Cost of equity capital = 0.0132 + 1.38(0.105 - 0.0132) = 0.1399 or 13.99%
General Electric:
Cost of equity capital = 0.0132 + 1.20(0.105 - 0.0132) = 0.1234 or 12.34%
Google:
Cost of equity capital = 0.0132 + 1.00(0.105 - 0.0132) = 0.1050 or 10.50%
Add Answer to:
Consider the estimated beta values as of August 12, 2017, for the following companies: Verizon Amazon...
1. We have the following information for Anheuser-Busch Companies, Inc Company Beta Market Market Bond Value...
1. We have the following information for Anheuser-Busch Companies, Inc Company Beta Market Market Bond Value Value Rating of of Debt Equity 40605 5375 Anheuser-0.5 Busch Assuming no tax is paid. Furthermore, we have the following economy-wide information Government Bond yields 10-year 4.5% Bond yield spreads (ie. bond yield -risk free rate) for A+ rating 10-year 1.00% Assume that the expected return on the S&P 500 is 10%. Estimate Anheuser-Busch's WACC using this information. 2. Identical Twin Beer, Co. has...
Answer both questions please! 1. We have the following information for Anheuser-Busch Companies, Inc Company Beta...
Answer both questions please!
1. We have the following information for Anheuser-Busch Companies, Inc Company Beta Market Market Bond Value Value Rating of of Debt Equity 40605 5375 Anheuser-0.5 Busch Assuming no tax is paid. Furthermore, we have the following economy-wide information Government Bond yields 10-year 4.5% Bond yield spreads (ie. bond yield -risk free rate) for A+ rating 10-year 1.00% Assume that the expected return on the S&P 500 is 10%. Estimate Anheuser-Busch's WACC using this information. 2. Identical...
Answer 1 of 1 a. For Business segments Business Segment Unlevered Beta adjusted for cash Media...
Answer 1 of 1 a. For Business segments Business Segment Unlevered Beta adjusted for cash Media Networks Parks & Resorts Studio Entertainment 1.0993 Consumer products 0.6752 Interactive Unlevered beta 1.002425 1.0313 6677 .0668 6034 1.0085 0.7024 1.2187 BUL = ßL/ (1 + (1-tarrate)( Debt/ Equity)) Beta unlevered adjusted for cash Ladjustedforcash BUL/(1- (Cash/Firmvalue) b. Unlevered betas for a firm Median regression beta for interactive business 1.03 (beta levered) DE for Disney 13% 0, 13 Marginal tax rate-36% Beta unlevered 0.95088...
GOLDSMITH INC. Balance Sheet at December 31, 2017 2016 2017 $ 11,530 $ 13,680 Cash 11,100 Accounts Receivable 10,680 In...
GOLDSMITH INC. Balance Sheet at December 31, 2017 2016 2017 $ 11,530 $ 13,680 Cash 11,100 Accounts Receivable 10,680 Inventories 40,140 35,250 64,920 57,460 Total Current Assets Plant Assets, Net 115,890 105,000 $180,810 $162,460 Total Assets $ 9,530 $ 7,990 Accounts Payable 7,760 7,160 Accrued Liabilities Total Current Liabilities 17,290 15,150 Long-term Debt 33,170 41,630 Total Stockholder's Equity 121,890 114,140 $180,810 $162,460 Total Liabilities and Equity GOLDSMITH INC. Income Statement for the year ended December 31, 2017 2016 2017 $95,640...
Q1. (iii) Bellville Wallop (BW) Ltd operates in 2 lines of business: Electrical with an estimated...
Q1. (iii) Bellville Wallop (BW) Ltd operates in 2 lines of business: Electrical with an estimated value of R10 billion and Furniture with an estimated value of R15 million. The following information is provided on average industry levered betas and debt to equity (D/E) ratios: Line of Business Average Industry levered Beta Average Industry D/E ratio Electrical 0,92 25% Furniture 1,17 50% Currently the firm has a D/E ratio of 1. Tax rate for the firm is 40%. Assume the...
5. The cost of retained earnings Aa Aa E the cost of raising capital through issuing...
5. The cost of retained earnings Aa Aa E the cost of raising capital through issuing The cost of raising capital through retained earnings is new common stock. The cost of equity using the CAPM approach The current risk-free rate of return (PRF) is 4.23%, while the market risk premium is 5.75%. the Allen Company has a beta of 0.92. Using the Capital Asset Pricing Model (CAPM) approach, Allen's cost of equity is The cost of equity using the bond...
To estimate the company's WACC, Marshall Inc. recently hired you as a consultant. You have obtain...
To estimate the company's WACC, Marshall Inc. recently hired you as a consultant. You have obtained the following information. (1) The firm's existing noncallable bonds which mature in 40 years, have an 5.00% annual coupon, a par value of $1,000, and a market price of $950. You have done some research and estimate the cost of issuing additional debt would cost you similarly to the existing bonds. (2) The company's current tax rate is 40%, but the tax rate is...
The DCF approach for estimated the cost of retained earnings, rs, is given as follows: Is...
The DCF approach for estimated the cost of retained earnings, rs, is given as follows: Is = fs = D1/Po + Expected GL Investors expect to receive a dividend yield, Po, plus a capital gain, g, for a total expected return. In -Select- , this expected return is also equal to the required return. It's easy to calculate the dividend yield; but because stock prices fluctuate, the yield varies from day to day, which leads to fluctuations in the DCF...
4. The cost of retained earnings True or False: It is free for a company to...
4. The cost of retained earnings True or False: It is free for a company to raise money through retained earnings, because retained earnings represent money that is left over after dividends are paid out to shareholders. False O True The cost of equity using the CAPM approach The current risk-free rate of return (rRF) is 4.67% while the market risk premium is 6.17%. The D'Amico Company has a beta of 0.92. Using the capital asset pricing model (CAPM) approach,...
True or False: It is free for a company to raise money through retained earnings, because...
True or False: It is free for a company to raise money through retained earnings, because retained earnings represent money that is left over after dividends are paid out to shareholders. True False The cost of equity using the CAPM approach The current risk-free rate of return (TRF) is 4.67%, while the market risk premium is 6.17%. the Jefferson Company has a beta of 1.56. Using the Capital Asset Pricing Model (CAPM) approach, Jefferson's cost of equity is The cost...
1. We have the following information for Anheuser-Busch Companies, Inc Company Beta Market Market Bond Value Value Rating of of Debt Equity 40605 5375 Anheuser-0.5 Busch Assuming no tax is paid. Furthermore, we have the following economy-wide information Government Bond yields 10-year 4.5% Bond yield spreads (ie. bond yield -risk free rate) for A+ rating 10-year 1.00% Assume that the expected return on the S&P 500 is 10%. Estimate Anheuser-Busch's WACC using this information. 2. Identical Twin Beer, Co. has...
Answer both questions please!
1. We have the following information for Anheuser-Busch Companies, Inc Company Beta Market Market Bond Value Value Rating of of Debt Equity 40605 5375 Anheuser-0.5 Busch Assuming no tax is paid. Furthermore, we have the following economy-wide information Government Bond yields 10-year 4.5% Bond yield spreads (ie. bond yield -risk free rate) for A+ rating 10-year 1.00% Assume that the expected return on the S&P 500 is 10%. Estimate Anheuser-Busch's WACC using this information. 2. Identical...
Answer 1 of 1 a. For Business segments Business Segment Unlevered Beta adjusted for cash Media Networks Parks & Resorts Studio Entertainment 1.0993 Consumer products 0.6752 Interactive Unlevered beta 1.002425 1.0313 6677 .0668 6034 1.0085 0.7024 1.2187 BUL = ßL/ (1 + (1-tarrate)( Debt/ Equity)) Beta unlevered adjusted for cash Ladjustedforcash BUL/(1- (Cash/Firmvalue) b. Unlevered betas for a firm Median regression beta for interactive business 1.03 (beta levered) DE for Disney 13% 0, 13 Marginal tax rate-36% Beta unlevered 0.95088...
GOLDSMITH INC. Balance Sheet at December 31, 2017 2016 2017 $ 11,530 $ 13,680 Cash 11,100 Accounts Receivable 10,680 Inventories 40,140 35,250 64,920 57,460 Total Current Assets Plant Assets, Net 115,890 105,000 $180,810 $162,460 Total Assets $ 9,530 $ 7,990 Accounts Payable 7,760 7,160 Accrued Liabilities Total Current Liabilities 17,290 15,150 Long-term Debt 33,170 41,630 Total Stockholder's Equity 121,890 114,140 $180,810 $162,460 Total Liabilities and Equity GOLDSMITH INC. Income Statement for the year ended December 31, 2017 2016 2017 $95,640...
5. The cost of retained earnings Aa Aa E the cost of raising capital through issuing The cost of raising capital through retained earnings is new common stock. The cost of equity using the CAPM approach The current risk-free rate of return (PRF) is 4.23%, while the market risk premium is 5.75%. the Allen Company has a beta of 0.92. Using the Capital Asset Pricing Model (CAPM) approach, Allen's cost of equity is The cost of equity using the bond...
The DCF approach for estimated the cost of retained earnings, rs, is given as follows: Is = fs = D1/Po + Expected GL Investors expect to receive a dividend yield, Po, plus a capital gain, g, for a total expected return. In -Select- , this expected return is also equal to the required return. It's easy to calculate the dividend yield; but because stock prices fluctuate, the yield varies from day to day, which leads to fluctuations in the DCF...
4. The cost of retained earnings True or False: It is free for a company to raise money through retained earnings, because retained earnings represent money that is left over after dividends are paid out to shareholders. False O True The cost of equity using the CAPM approach The current risk-free rate of return (rRF) is 4.67% while the market risk premium is 6.17%. The D'Amico Company has a beta of 0.92. Using the capital asset pricing model (CAPM) approach,...
True or False: It is free for a company to raise money through retained earnings, because retained earnings represent money that is left over after dividends are paid out to shareholders. True False The cost of equity using the CAPM approach The current risk-free rate of return (TRF) is 4.67%, while the market risk premium is 6.17%. the Jefferson Company has a beta of 1.56. Using the Capital Asset Pricing Model (CAPM) approach, Jefferson's cost of equity is The cost...
Most questions answered within 3 hours.
-
what is IoT? How is it being used today? How will it be used in
the...
asked 3 minutes ago -
Please answer the four questions below.
1. If you were going to test a method that...
asked 17 minutes ago -
Provide two or three examples of support he uses to reinforce
his arguments?
The Alienation of...
asked 25 minutes ago -
QUESTION 1
Why do we see terms with multiple names in the database
community?
Consistency is...
asked 20 minutes ago -
In a titration experiment, 11.5 mL of 0.400 M H2SO4 neutralized
48.0 mL of NaOH. What...
asked 24 minutes ago -
A shot-putter throws the shot with a horizontal velocity of 10
m/s and a
vertical velocity...
asked 40 minutes ago -
Mildred sells industrial-sized refrigeration units. Her
prospective buyer's face looks tense, and his forehead is wrinkled....
asked 41 minutes ago -
Clark Heter is an industrial engineer at Lyons Products. He
would like to determine whether there...
asked 1 hour ago -
3. Use a text editor to create a comma-delimited file of user
IDs and passwords. Revise...
asked 1 hour ago -
Jensen and Associates has a projected balance
sheet that includes the following accounts. What is the...
asked 57 minutes ago -
implement a doubly-linked list in C. Each node in the linked list should contain a string,...
asked 1 hour ago -
What are some best practices and things to avoid when developing
a PowerPoint presentation or file
asked 1 hour ago