O'Brien Inc. has the following data: rRF = 5.00%; RPM = 6.00%; and b = 1.05....
O'Brien Inc. has the following data: rRF = 5.00%; RPM = 6.00%; and b = 1.05. What is the firm's cost of equity from retained earnings based on the CAPM?
Homework Answers
cost of equity =risk free rate+Beta*market risk premium
=5+(1.05*6)
which is equal to
11.3%
Add Answer to:
O'Brien Inc. has the following data: rRF = 5.00%; RPM = 6.00%;
and b = 1.05....
O'Brien Inc. has the following data: rRF (risk free rate) = 5.00%; Market risk premium (MRP)=...
O'Brien Inc. has the following data: rRF (risk free rate) = 5.00%; Market risk premium (MRP)= 6.00%; and b (beta) = 1.05. What is the firm's cost of common equity based on the CAPM? (10 points)
1. Spartan Inc. has the following data: risk-free rate = 4.00%, market risk premium = 6%,...
1. Spartan Inc. has the following data: risk-free rate = 4.00%, market risk premium = 6%, and beta = 1.25. What is the firm's cost of equity from retained earnings based on the CAPM? 10.25% 11.50% 11.78% 12.21% 12.40%
Hello, please advise, thanks Question: Suppose you are an analyst with the following data: rRF =...
Hello, please advise, thanks Question: Suppose you are an analyst with the following data: rRF = 5.5% rM - rRF = 6% b=0.8 D1 = $1.00 P0 = $25.00 g = 6% firm's bond yield = 6.5% Please answer the following: 1.What is this firm's cost of equity using the CAPM? 10.30 2.What is this firm's cost of equity using the DCF? 10 3.What is this firm's cost of equity using the bond-yield-plus-risk-premium approach? Use the midrange of the judgmental...
Miriam Co has a bu=1, Wd=30%, T= 21% RPM= 5%, rRF=3%. Using the CAPM model, calculate...
Miriam Co has a bu=1, Wd=30%, T= 21% RPM= 5%, rRF=3%. Using the CAPM model, calculate Miriam Co's cost of equity?
Heino Inc., hired you as a consultant to help them estimate their cost of capital. You have...
Heino Inc., hired you as a consultant to help them estimate their cost of capital. You have been provided with the following data: risk-free rate = 5%; market risk premium = 6.0%, and beta = 1.05. Based on the CAPM approach, what is the cost of equity from retained earnings given a flotation cost of 10%? 10.50% / 10.71% / 10.88% / 11.30% / 11.60%
Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital....
Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You have been provided with the following data:TRF4.10%; RPM=5.25%; and b = 1.70. Based on the CAPM approach, what is the cost of equity from retained earnings? 15.24% 13.94% 10.03% 13.03% 12.63%
Suppose you are an analyst with the following data: rRF = 5.5% rM – rRF =...
Suppose you are an analyst with the following data: rRF = 5.5% rM – rRF = 6% b=0.8 D1 = $1.00 P0 = $25.00 g = 6% firm’s bond yield = 6.5% a) What is this firm’s cost of equity using the DCF? b) What is this firm’s cost of equity using the bond-yield-plus-risk-premium approach? Use the midrange of the judgmental risk premium for the bond-yield-plus-risk-premium approach.
You have been hired by the CFO of Lugones Industries to help estimate its cost of...
You have been hired by the CFO of Lugones Industries to help estimate its cost of common equity. You have obtained the following data: (1) rd = yield on the firm's bonds = 7.00% and the risk premium over its own debt cost = 4.00%. (2) rRF = 5.00%, RPM = 6.00%, and b = 1.25. (3) D1 = $1.20, P0 = $35.00, and g = 8.00% (constant). You were asked to estimate the cost of common based on the...
4. The cost of retained earnings True or False: It is free for a company to raise money through retained earnings, beca...
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. True False 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 5.75%. The Allen Company has a beta of 1.56. Using the capital asset pricing model (CAPM) approach, Allen's...
The cost of equity using the CAPM approach The current risk-free rate of return (rRF) is...
The cost of equity using the CAPM approach The current risk-free rate of return (rRF) is 3.86%, while the market risk premium is 5.75%. The Jefferson Company has a beta of 0.92. Using the Capital Asset Pricing Model (CAPM) approach, Jefferson's cost of equity is 9.15% 9.61% 10.98% 10.07% The cost of equity using the bond yield plus risk premium approach | The Adams Company is closely held and, therefore, cannot generate reliable inputs with which to use the CAPM...
O'Brien Inc. has the following data: rRF (risk free rate) = 5.00%; Market risk premium (MRP)= 6.00%; and b (beta) = 1.05. What is the firm's cost of common equity based on the CAPM? (10 points)
Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You have been provided with the following data:TRF4.10%; RPM=5.25%; and b = 1.70. Based on the CAPM approach, what is the cost of equity from retained earnings? 15.24% 13.94% 10.03% 13.03% 12.63%
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. True False 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 5.75%. The Allen Company has a beta of 1.56. Using the capital asset pricing model (CAPM) approach, Allen's...
The cost of equity using the CAPM approach The current risk-free rate of return (rRF) is 3.86%, while the market risk premium is 5.75%. The Jefferson Company has a beta of 0.92. Using the Capital Asset Pricing Model (CAPM) approach, Jefferson's cost of equity is 9.15% 9.61% 10.98% 10.07% The cost of equity using the bond yield plus risk premium approach | The Adams Company is closely held and, therefore, cannot generate reliable inputs with which to use the CAPM...
Most questions answered within 3 hours.
-
> Women’s pulse rates are normally distributed with a mean of
68.5 beats per minute and...
asked 3 minutes ago -
Briefly describe an aspect of the strengths perspective that is
consistent with your own understanding of...
asked 5 minutes ago -
Step by step method of using Sparse Identification of Nonlinear
Dynamics (SINDy) to model your own...
asked 12 minutes ago -
3) What are the typical social structures in a global city?
asked 3 hours ago -
Luther Corporation
Consolidated Balance Sheet
December 31, 2019 and 2018 (in $ millions)
Assets
2019
2018...
asked 3 hours ago -
(Expected rate of return and risk) Carter Inc. is evaluating a
security. Calculate the investment’s expected...
asked 6 hours ago -
What specific indicators can point to lack of progress for
African Americans in American society?
asked 7 hours ago -
1-The Electrons in a beam are moving at 2.7×108 m/s in an
electric field of 15000...
asked 7 hours ago -
A gas tank is a vertical cylinder. It has a radius of 1m, a
height of...
asked 7 hours ago -
Accent Software faces the following conditions. All of these
support Accent’s use of a market-penetration pricing...
asked 8 hours ago -
A mathematically inclined friend emails you the following
instructions: "Meet me in the cafeteria the first...
asked 8 hours ago -
A monopoly sells in two countries . The demand curves in the two
countries are p1...
asked 9 hours ago