1. Below are the most recent financial statements information for M. Inc. (in million $). Dec.31.202 Dec.31.2021 0 Financial assets 130,334 136,527 Operating assets 203,445 164,784 Financial Liabilities 67,775 70,998 Operating liabilities 124,016 112,009 Common stockholders' equity 141,988 118,304 Total shares outstanding 7,519 7,571 Dec.31.202 Dec.31.2021 0 Financial Income after tax 2,790 2,108 Financial Expense after tax 1,853 2,047 Net Financial Income 937 61 The stock price of M. was around $340 at the end of fiscal year 2021. The firm beta is 0.94. Around December 31, 2021, the 10-year US government bond yield is about 1.5%. The market risk premium of US is estimated to be about 3.3%. 1) What is the cost of equity for M. at the end of fiscal year 2021? 2) What is the cost of operations for M. at the end of fiscal year 2021? 3) Compare the above two cost of capital and explain why they are different
1. Below are the most recent financial statements information for M. Inc. (in million $). Dec.31.202 Dec.31.2021 0 Financial assets 130,334 136,527 Operating assets 203,445 164,784 Financial Liabilities 67,775 70,998 Operating liabilities 124,016 112,009 Common stockholders' equity 141,988 118,304 Total shares outstanding 7,519 7,571 Dec.31.202 Dec.31.2021 0 Financial Income after tax 2,790 2,108 Financial Expense after tax 1,853 2,047 Net Financial Income 937 61 The stock price of M. was around $340 at the end of fiscal year 2021. The firm beta is 0.94. Around December 31, 2021, the 10-year US government bond yield is about 1.5%. The market risk premium of US is estimated to be about 3.3%. 1) What is the cost of equity for M. at the end of fiscal year 2021? 2) What is the cost of operations for M. at the end of fiscal year 2021? 3) Compare the above two cost of capital and explain why they are different
Cornerstones of Financial Accounting
4th Edition
ISBN:9781337690881
Author:Jay Rich, Jeff Jones
Publisher:Jay Rich, Jeff Jones
Chapter9: Long-term Liabilities
Section: Chapter Questions
Problem 103.1C: Leverage Cook Corporation issued financial statements at December 31, 2019, that include the...
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