If risk free rate is 2%, market risk premium (also called the equity risk premium) is 5%, and a company has a beta of 1.5. What is the company’s cost of equity?
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- If risk free rate is 2%, market risk premium (also called the equity risk premium) is 5%, and a company has a beta of 1.5. What is the company’s
cost of equity ?
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- A company had WACC (weighted average cost of capital) equal to 8. % If the company pays off mortgage bonds with an interest rate of 4% and issues an equal amount of new stock considered to be relatively risky by the market, which of the following is true? a. residual income will increase. b. ROI will decrease. c. WACC will increase. d. WACC will decrease.Assume that Temp Force has a beta coefficient of 1.2, that the risk-free rate (the yield on T-bonds) is 7.0%, and that the market risk premium is 5%. What is the required rate of return on the firms stock?What is the cost of equity for a firm if the firm's equity has a beta of 1.4, the risk-free rate of return is 3%, the expected return on the market is 10%, and the return to the company's debt is 7%?
- A firm has a required rate of return (k) of 15 percent and a return on equity (ROE) of 18%. If the plowback ratio is 40% what is the stock's P/E ratio?Suppose the current risk -free rate of return is 5 percent and the expected market risk premium is 7 percent. Using this information, estimate the cost of retained earnings for a company with a beta coefficient equal to 2.0?Steady Company's stock has a beta of 0.15. If the risk-free rate is 5.9% and the market risk premium is 6.8%, what is an estimate of Steady Company's cost of equity? Steady's cost of equity capital is _________%.
- Company Q has earnings of $3.00 per share, a market price of $25, and a beta of 1.25. The risk-free rate is 3% and the risk premium for the market as a whole is 5%. What is the current rate of return for investing in company Q? What is the current "reward-to-risk ratio" for Company Q?Company Q has earnings of $3.00 per share, a market price of $25, and a beta of 1.25. The risk-free rate is 3% and the risk premium for the market as a whole is 5%. a. What is the expected return on the market? b. What is the current P/E ratio for Company Q?Assume that the Collins Company has a beta of 1.8 and that the risk-free rate of return is 2.5 percent. If the equity-risk premium is six percent, calculate the cost of equity for the Collins Company using the capital asset pricing model.
- A. CALCULATE the cost of equity capital of H Ltd., whose risk-free rate of return equals 10%. The firm's beta equals 1.75 and the return on the market portfolio equals to 15%. B. The current ratio of H Ltd is 5:1 and standard current ratio given by accounting bodies is 2:1? Do you think that H Ltd should try to reduce its current ratio?Vargo, Inc., has a beta estimated by Value Line of 1.3. The current risk-free rate (long-term) is 3.5 percent and the market risk premium is 6.4 percent. What is the cost of common equity for Vargo?Steady Company's stock has a beta of 0.24. If the risk-free rate is 6.1% and the market risk premium is 6.9%, what is an estimate of Steady Company's cost of equity?
