Suppose Pepsicos stock has a beta of 0.59. If the risk-free rate is 3% and the expected
Question:
Suppose Pepsico’s stock has a beta of 0.59. If the risk-free rate is 3% and the expected return of the market portfolio is 7%, what is Pepsico’s equity cost of capital?
Fantastic news! We've Found the answer you've been seeking!
Step by Step Answer:
Answer rating: 0% (1 review)
Using the Capital Asset Pricing Model CAPM formula with the provided values Cost of Eq...View the full answer
Answered By
Asim farooq
I have done MS finance and expertise in the field of Accounting, finance, cost accounting, security analysis and portfolio management and management, MS office is at my fingertips, I want my client to take advantage of my practical knowledge. I have been mentoring my client on a freelancer website from last two years, Currently I am working in Telecom company as a financial analyst and before that working as an accountant with Pepsi for one year. I also join a nonprofit organization as a finance assistant to my job duties are making payment to client after tax calculation, I have started my professional career from teaching I was teaching to a master's level student for two years in the evening.
My Expert Service
Financial accounting, Financial management, Cost accounting, Human resource management, Business communication and report writing. Financial accounting : • Journal entries • Financial statements including balance sheet, Profit & Loss account, Cash flow statement • Adjustment entries • Ratio analysis • Accounting concepts • Single entry accounting • Double entry accounting • Bills of exchange • Bank reconciliation statements Cost accounting : • Budgeting • Job order costing • Process costing • Cost of goods sold Financial management : • Capital budgeting • Net Present Value (NPV) • Internal Rate of Return (IRR) • Payback period • Discounted cash flows • Financial analysis • Capital assets pricing model • Simple interest, Compound interest & annuities
4.40+
65+ Reviews
86+ Question Solved
Related Book For
Corporate Finance The Core
ISBN: 9781292158334
4th Global Edition
Authors: Jonathan Berk, Peter DeMarzo
Question Posted:
Students also viewed these Business questions
-
The CFO of Bunyan Lumber Corporation, Anita Rai has decided to invest some money in the financial market to diversify the risks of business operations and increase rate of return. She has been...
-
KYC's stock price can go up by 15 percent every year, or down by 10 percent. Both outcomes are equally likely. The risk free rate is 5 percent, and the current stock price of KYC is 100. (a) Price a...
-
26. With its current leverage, Impi Corporation will have net income next year of 4.5 million. If Impis corporate tax rate is 35% and pay 8% interest on its debt, how much additional debt can Impi...
-
Evaluate the stiffness matrix for the elements shown in Figure P11-6. Let E = 100 GPa and v = 0.3? Figure P11-6, (a) (b) (25, 25.0) 2 (10, 0, 0) (40, 0,0) (25, 0, 25) (10, 7, 0) (4, 2, 0) (12, 2, 0)...
-
A national polling organization has been hired to estimate the mean amount of cash carried by adults in the United States. The original sampling plan involved telephone calls placed to 2500 different...
-
Dismal.Com is a producer of depressing Internet products. The company is currently not paying dividends, but its chief financial officer thinks that starting in 3 years it can pay a dividend of $15...
-
Find the mode of the weights listed in Example 1. Data from Example 1 The weights (in pounds) for a sample of adults before starting a weight-loss study are listed. What is the mean weight of the...
-
Here are the prices of three bonds with 10-year maturities: Bond Coupon (%) Price (%) 2 ............................ 81.62 4 ............................ 98.39 8 ........................... 133.42 If...
-
A glass window is 2.0 m wide and 1.5 m high and 7.5 mm thick. The temperature of the inner surface is 18 C and that of the outer surface is 11 C. (a) Find the rate of heat flow through the window....
-
Aluminum maker Alcoa has a beta of about 1.96, whereas Hormel Foods has a beta of 0.65. If the expected excess return of the marker portfolio is 3%, which of these firms has a higher equity cost of...
-
Suppose Autodesk stock has a beta of 2.10, whereas Costco stock has a beta of 0.75. If the risk-free interest rate is 5.5% and the expected return of the market portfolio is 14%, what is the expected...
-
One student is selected from the student body of your college. Define the following events: Mthe student selected is male, Fthe student selected is female, Sthe student selected is registered for...
-
On 25 February 2018 Badar Limited (BL), in a move to list its shares on Pakistan Stock Exchange, received approval from the Commission for the publication of prospectus. Under the provisions of the...
-
Consider the following cash flows: Year 0 1 2 3 4 Cash Flow -$ 7,700 1,900 3,000 2,300 1,700 What is the payback period for the cash flows? Note: Do not round intermediate calculations and round your...
-
Micro, Inc. is a computer equipment manufacturer. Micro is a calendar-year C corporation that uses the accrual method of tax accounting. Bill has prepared a corporate tax return for Micro, Inc. for...
-
The following data for November have been provided by Hunn Corporation, a producer of precision drills for oil exploration: Budgeted production 5 , 0 0 0 drills Standard machine - hours per drill 1 0...
-
Fabulous Fabricators needs to decide how to allocate space in its production facility this year. It is considering the following contracts: Contract A NPV $1.96 million Use of Facility 100% BC 58%...
-
Spherical mirrors. Object O stands on the central axis of a spherical mirror. For this situation, each problem in Table 34-3 gives object distance Ps (centimeters), the type of mirror, and then the...
-
What types of inventory issues Starbucks might reflect upon at the end of each year? The mission of Starbucks is to inspire and nurture the human spiritone person, one cup, and one neighborhood at a...
-
Happy Valley Homecare Suppliers, Inc. (HVHS), had $10.9 million in sales in 2015. Its cost of goods sold was $4.36 million, and its average inventory balance was $1.77 million. a. Calculate the...
-
Your company had $14 million in sales last year. Its cost of goods sold was $9.8 million and its average inventory balance was $1,300,000. What was its average days of inventory?
-
Your firm purchases goods from its supplier on terms of 1.7/15, net 35. a. What is the effective annual cost to your firm if it chooses not to take the discount and makes its payment on day 35? b....
-
How does cultural pluralism influence societal norms and values, and what implications does this have for social cohesion and identity formation ?
-
What mechanisms exist for the preservation and revitalization of endangered languages and indigenous cultural practices, and how do these efforts intersect with broader socio-political movements ?
-
A bank reconciliation from Ware, Inc. is provided here. Cash balance per bank statement Add: Deposits in transit $18,300 2,110 20,410 Less: Outstanding checks 1,095 Adjusted cash balance per bank...
Study smarter with the SolutionInn App