Suppose the Simmons Co's common stock has a beta of 1.37, the risk-free rate is 3.4...

Suppose the Simmons Co's common stock has a beta of 1.37, the risk-free rate is 3.4 percent, and the market risk premium is 8.2 percent. The yield to maturity in the firm’s bonds is 7.6 percent and the debt-equity ratio is .45.

What is the cost of equity of this firm?

What is the WACC if the tax rate is 34 percent?

Expert Solution

jeff jeffy answered 2 years ago

The Nixon Corporation’s common stock has a beta of .95. If the risk-free rate is 2.7...

The Nixon Corporation’s common stock has a beta of .95. If the risk-free rate is 2.7 percent and the expected return on the market is 10 percent, what is the company’s cost of equity capital? pls dont answer in excel or spreadsheet rather explain by writing in formula and stepwise

Fusilli Jerry Corp's common stock has a beta of 1.30. If the risk free rate of...

Fusilli Jerry Corp's common stock has a beta of 1.30. If the risk free rate of return is expected to be 4% and the market risk premium is 10%, what is the required return on Fusilli Jerry Corp's common stock? 53.00 17.00 74.20 22.20

Netflix common stock has a beta=0.6. The risk-free rate is 9%, and the market return is...

Netflix common stock has a beta=0.6. The risk-free rate is 9%, and the market return is 14%. a. Determine the risk premium on Netflix common stock. b. Determine the required return that Netflix common stock should provide. c. Determine Netflix's cost of common stock equity using the CAPM.

1. You are analyzing a common stock with a beta of 1.5. The risk-free rate of...

1. You are analyzing a common stock with a beta of 1.5. The risk-free rate of interest is 5 percent and the market risk premium is 10 percent. If the stock's expected return based on its market price is 19.5%, the stock is overvalued since the expected return is above the SML. the stock is undervalued since the expected return is above the SML. the stock is correctly valued since the expected return is above the SML. the stock is...

Scott, Inc. common stock has an equity beta of 1.1, the annual risk-free rate is 5%,...

Scott, Inc. common stock has an equity beta of 1.1, the annual risk-free rate is 5%, and the expected return on the market portfolio is 10%. The firm expects that following 2009 its dividends will increase at the same annual compound rate as that over the 2006-2009 period. Year. Dividend 2006 2.5 2007 2.6 2008 2.7 2009 2.8 Estimate the value of a share of Scott, Inc.’s stock using the dividend discount model. Round your final answer to two decimals.

23.Jack Ltd has an equity beta of 1.4, the risk-free rate is 3.4 percent and market...

23.Jack Ltd has an equity beta of 1.4, the risk-free rate is 3.4 percent and market risk premium is 8 percent. The yield to maturity of the firm’s bonds is 7 percent and the debt-equity ratio is 0.5. What is the weighted average cost of capital if the tax rate is 30 percent? Select one: a. 11.37 percent b. 11.65 percent c. 10.94 percent d. 12.60 percent 24. Jack Ltd has a levered cost of equity of 13.84 percent and...

Stock A has a beta of 1.5, the risk-free rate is 4% and the return on...

Stock A has a beta of 1.5, the risk-free rate is 4% and the return on the market is 9%. If inflation changes by -2%, by how much will the required return on Stock A change?

Stock A has a beta of 0, the risk-free rate is 4% and the return on...

Stock A has a beta of 0, the risk-free rate is 4% and the return on the market is 9%. If the market risk premium changes by 8%, by how much will the required return on Stock A change?

a) KP’s stock has a beta of 1.20. The risk free rate is 3% and the...

a) KP’s stock has a beta of 1.20. The risk free rate is 3% and the expected market risk premium E(rm)-rf is 6%. What is the required rate of return on KP stock? b) KP just paid a dividend (D0) of $2.00. Dividends are expected to grow at 17% per year for the next 4 years, after which they will grow at 3% forever. What is KP’s current stock price per share? Note that the required return on the stock...

The risk-free rate is 4.6 percent. Stock A has a beta = 1.2 and Stock B has...

The risk-free rate is 4.6 percent. Stock A has a beta = 1.2 and Stock B has a beta = 1. Stock A has a required return of 12.1 percent. What is Stock B’s required return? Group of answer choices 11.05% 10.85% 10.95% 11.15% 11.25% You observe the following yield curve for Treasury securities: Maturity Yield 1 Year 3.20% 2 Years 4.40% 3 Years 5.20% 4 Years 5.40% 5 Years 7.40% Assume that the pure expectations hypothesis holds. What does the market expect will be the yield on 3-year securities,...

Question