Your estimate of the market risk premium is 5%. The risk-free rate of return is 1% and General Motors has a beta of 1.11. What is General Motors' cost of equity capital?
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A: Beta= 1.2 Risk-free rate= 6% Market expected return=11% Cost of equity using the Capital Asset…
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A: Given Information : Market risk premium = 5%Beta = 0.9 Risk free rate = 3%
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A: Required Return = Risk free Rate + Beta * (market return - risk free rate)
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Q: 16
A: MARKET RISK PREMIUM (MARKET RETURN - RISK FREE RATE) = 9%BETA= 1.4RISK FREE RATE = 3%
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Q: calculate the cost of equity for the Collins Company using the capital asset pricing model.
A: Given information is: Assume that the Collins Company has a beta of 1.8 and that the risk-free rate…
Q: 15
A: MARKET RISK PREMIUM (MARKET RETURN - RISK FREE RATE) = 8% BETA= 1.8 RISK FREE RATE = 3%
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A: Risk free rate (Rf) = 0.021 Market return (Rm) = 0.09 Beta (b) = 1.75 Required return = ?
Q: e in
A: Given information:
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A: Firm beta (B) = 1.75 Risk free rate (Rf) = 8% Market return (Rm) = 12%
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A: required rate of return = risk free rate + beta * (market return less risk free rate)
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A: The formula used is shown:
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A: Market Rate of Return = 10% Beta = 1 Risk Free Rate = 5%
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A: Given: Beta = 1.11 Risk free rate = 4.6% Market rate = 12.1%
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Your estimate of the market risk premium is 5%. The risk-free
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- 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?An analyst has modeled the stock of a company using the Fama-French three-factor model. The market return is 10%, the return on the SMB portfolio (rSMB) is 3.2%, and the return on the HML portfolio (rHML) is 4.8%. If ai = 0, bi = 1.2, ci = 20.4, and di = 1.3, what is the stock’s predicted return?Your estimate of the market risk premium is 6%. The risk-free rate of return is 1% and General Motors has a beta of 1.79. What is General Motors' cost of equity capital?
- Landscapers R Us, Inc., has a beta of 1.6 and is trying to calculate its cost of equity capital. If the risk-free rate of return is 4 percent and the expected return on the market is 10 percent, then what is the firm's cost of equity capital?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) Equity holders’ investment in the firm is K100 million, and the beta of the equity is 0.6. if the T-bill rate 6 %, and the market risk premium is 8 %. What would be a fair annual profit? (b) Stock XYZ has an expected return of 12 %, and risk of β and = 1.0. Stock ABC is expected to return 13 % with a beta of 1.5. The markets expected return is 11 % and risk free rate is 5 %. Which stock is a better buy? What is the alpha of each stock? Plot the SML and the two stocks and show the alphas of each on the graph? (c) The risk free rate is 8 % and the expected return on the market portfolio is 16 %. A firm is considering a project with an estimated beta of 1.3. What is the required rate of return on the project? If the IRR is of the project is 19 %, what is the project alpha?
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- Plaid Pants, Inc. common stock has a beta of 0.90, while Acme Dynamite Company common stock has a beta of 1.80. The expected return on the market is 10 percent, and the risk-free rate is 6 percent. According to the capital-asset pricing model (CAPM) and making use of the information above, the required return on Plaid Pants' common stock should be _____ , and the required return on Acme's common stock should be____ .Kaiser Aluminum has a beta of 0.70. If the risk-free rate (RRF) is 5.0%, and the market risk premium is (RPM) is 7.4 % what is the firm's cost of equity from retained earnings based on the CAPM?Your answer should be between 8.70 and 11.25, rounded to 2 decimal places, with no special characters.Treasury bills currently have a return of 3.5% and the market risk premium is 8%. If a firm has a beta of 1.6, what is its cost of equity?