Question
In: Finance
QUIZ 4:- Assume that you have the following information:- Market Info:- Real interest rate = 2.0%;...
QUIZ 4:- Assume that you have the following information:- Market Info:- Real interest rate = 2.0%; Expected inflation = 4.0%; Rm = 12.0%; Tax = 30.0%. Com. Stock info:- Par value = $1.0 ; Market value (price) = ?? ; Beta = 1.60 ; No. of outstanding shares = 1,000,000.0 ; EPS $3.0 ; pay-out ratio = 30.0%; Growth in EPS & Dividends = 5.0% ; Preferred Stock info:- Par value = $100.0; Dividend per share = 10.0%; Rp=8.0%; No. of outstanding shares = 100,000.0; Price = ???? Bonds info:- Par value = $1,000.0; Coupon interest = 4.0% ; YTM = 6.0%; Time to maturity = 20 years ; No. of bonds = 100.0; Price = ???
1- Calculate the WACC using historical weights in the capital structure.
2 - Calculate the WACC using market weights in the capital structure.
Solutions
jeff jeffy answered 1 year agoRelated Solutions
Assume that you have the following information:- Market Info:- Real interest rate = 2.0%; Expected inflation...
Assume that you have the following information:- Market Info:-
Real interest rate = 2.0%; Expected inflation = 4.0%; Rm = 12.0%;
Tax = 30.0%. Com. Stock info:- Par value = $1.0 ; Market value
(price) = ?? ; Beta = 1.60 ; No. of outstanding shares =
1,000,000.0 ; EPS $3.0 ; pay-out ratio = 30.0%; Growth in EPS &
Dividends = 5.0% ; Preferred Stock info:- Par value = $100.0;
Dividend per share = 10.0%; Rp=8.0%; No. of outstanding...
Assume that you have the following information:- Market Info:- Real interest rate = 2.0%; Expected inflation...
Assume that you have the following information:-
Market Info:- Real interest rate = 2.0%; Expected inflation =
4.0%; Rm = 12.0%; Tax = 30.0%.
Com. Stock info:- Par value = $1.0 ; Market value (price) = ?? ;
Beta = 1.60 ; No. of outstanding shares = 1,000,000.0 ; EPS $3.0 ;
pay-out ratio = 30.0%;
Growth in EPS & Dividends = 5.0% ;
Preferred Stock info:- Par value = $100.0; Dividend per share =
10.0%; Rp=8.0%; No. of outstanding...
Assume that you have the following information:- Market Info:- Real interest rate = 2.0%; Expected inflation...
Assume that you have the following information:-
Market Info:- Real interest rate = 2.0%; Expected inflation =
4.0%; Rm = 12.0%; Tax = 30.0%.
Com. Stock info:- Par value = $1.0 ; Market value (price) = ?? ;
Beta = 1.60 ; No. of outstanding shares = 1,000,000.0 ; EPS $3.0 ;
pay-out ratio = 30.0%;
Growth in EPS & Dividends = 5.0% ;
Preferred Stock info:- Par value = $100.0; Dividend per share =
10.0%; Rp=8.0%; No. of outstanding...
you have the following information:- Market Info:- Real interest rate = 2.0%; Expected inflation = 4.0%;...
you have the following information:-
Market Info:- Real interest rate = 2.0%; Expected inflation =
4.0%; Rm = 12.0%; Tax = 30.0%.
Com. Stock info:- Par value = $1.0 ; Market value (price) = ?? ;
Beta = 1.60 ; No. of outstanding shares = 1,000,000.0 ; EPS $3.0 ;
pay-out ratio = 30.0%;
Growth in EPS & Dividends = 5.0% ;
Preferred Stock info:- Par value = $100.0; Dividend per share =
10.0%; Rp=8.0%; No. of outstanding shares =...
Assignment No. 4:- Assume that the real interest rate is 2.0%; Expected Inflation is 3.0%; Beta...
Assignment No. 4:- Assume that the real interest rate is 2.0%;
Expected Inflation is 3.0%; Beta is 1.30; Required Return on the
Market is 10.0%. Use CAPM to calculate:- 1- The risk-free rate. 2 -
The market risk-premium. 3 - The Expected or Required rate of
return. 4 - If Expected Inflation is 4.0%; The Expected rate of
return becomes?? 5 - If the Required Return on the Market is 12.0%;
The Expected rate of return becomes??
Assume the following information: 90?day U.S. interest rate = 4% 90?day Malaysian interest rate = 3%...
Assume the following information:
90?day U.S. interest rate = 4%
90?day Malaysian interest rate = 3%
90?day forward rate of Malaysian ringgit = $.400
Spot rate of Malaysian ringgit = $.404
Assume that the Santa Barbara Co. in the United States will need
500,000 ringgit in 90 days. It wishes to hedge this payables
position. Would it be better off using a forward hedge or a money
market hedge? Substantiate your answer with estimated costs for
each type of hedge.
Assume the following information: 90?day U.S. interest rate = 4% 90?day Malaysian interest rate = 3%...
Assume the following information:
90?day U.S. interest rate = 4%
90?day Malaysian interest rate = 3%
90?day forward rate of Malaysian ringgit = $.400
Spot rate of Malaysian ringgit = $.404
Assume that the Santa Barbara Co. in the United States will need
500,000 ringgit in 90 days. It wishes to hedge this payables
position. Would it be better off using a forward hedge or a money
market hedge? Substantiate your answer with estimated costs for
each type of hedge.
Assume the following information: 90?day U.S. interest rate = 4% 90?day Malaysian interest rate = 3%...
Assume the following information:
90?day U.S. interest rate = 4%
90?day Malaysian interest rate = 3%
90?day forward rate of Malaysian ringgit = $.400
Spot rate of Malaysian ringgit = $.404
Assume that the Santa Barbara Co. in the United States will need
500,000 ringgit in 90 days. It wishes to hedge this payables
position. Would it be better off using a forward hedge or a money
market hedge? Substantiate your answer with estimated costs for
each type of hedge.
What is the distinction between the nominal interest rate and the real interest rate? 4. In a...
What is the distinction between the
nominal interest rate and the real interest rate?
4. In a
diagram, show the effect on the real interest rate and amount of
investment if people’s disposable income increases.
5. Explain how
a government budget deficit affects the market for loanable funds.
What is the effect on investment? Ignore the possibility of a
Ricardo-Barro effect.
6. Before
there is any international trade or international lending and
borrowing, suppose the world real interest rate is less than the...
Assume the real rate of interest is 4.00% and the inflation rate is 6.00%. What is...
Assume the real rate of interest is 4.00% and the inflation rate
is 6.00%. What is the value today of receiving 11,413.00 in 9.00
years? round answer to 2 decimal places
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