From the following information in respect of a company you are required to calculate the cost of

Question:

● From the following information in respect of a company you are required to calculate the cost of equity using CAPM approach:

(i) Risk-free Rate of Return 12%

(ii) Expected market price of equity shares at the year-end is `1,400

(iii) Initial price of investment in equity shares of the company is `1,200

(iv) Beta risk factor of the company is 0.70

(v) Expected dividend at the year-end is `140

Fantastic news! We've Found the answer you've been seeking!

Step by Step Answer:

Related Book For book-img-for-question

Financial Management

ISBN: 9789352605606

1st Edition

Authors: Swapan Sarkar, Bappaditya Biswas, Samyabrata Das, Ashish Kumar Sana

See More Books

Question Posted: Jul 24, 2024 10:05 AM

See More Questions

The Wall Street Journal Corporate Perceptions Study 2011 surveyed readers and asked how each rated the quality of management and the reputation of the company for over 250 worldwide corporations....
To obtain all of the stock of Molly, Inc., Harrison Corporation issued its own common stock. Harrison had to pay $98,000 to lawyers, accountants, and a stock brokerage firm in connection with...
I:18-25 Roth IRA Versus Deductible IRA. Beth wants to contribute to either a traditional deductible IRA or a Roth IRA. However, she can afford to contribute only $5,400 after-tax dollars to a Roth...
A student gets a 75 on the statistics test and a 25 on the biology test.
The fund-basis financial statements of Cherokee Library District (a special-purpose government engaged only in governmental activities) have been completed for the year 2012 and appear in the second...
You know that your cousin was responsible in breaking your neighbors window. Your neighbor is a struggling man and cannot afford to repair the window, so he is looking for the person responsible to...
From the following information, calculate b (beta), and determine the cost of equity, assuming risk-free return (RF) = 7% and market return RM = 14%. Month Return on Security A (%) Market Return (%)...
If the risk-free Rate of Return and the market Rate of Return of an investment are 14% and 18%, respectively, calculate the cost of equity share capital if (a) b = 1, (b) b = 2/3 and (c) b = 5/4.
Prove the following properties of the Gamma function. (a) (n) = (n1)! For n = 1,2,3,. (b) (x + 1) = x (x) (c) (1 / 2) = x.
Find anti derivative of ( 2 t - 4 + 3 ^ ( 1 / 2 ) ) / t ^ ( 1 / 2 )
How Adidas is using creative narratives to build brand equity Adidas' outdoor division is drawing on the expertise of its wider athletic business while at the same time flexing its creative muscle to...
May I have a word" Alysha Stark popped her head in at the corner office of the Managing Director Mike O' Connor. It's early on a Monday morning. When Alysha, his star Director, starts something this...
1. What are the threats being faced by Indian General Insurance Ltd. (IGIL)? 2. What are its traditional strengths? What 'business definitions' should it follow while capitalizing on its traditional...
You go to discuss the incident and the client's claims with your supervisor. As you retell the incident, it is clear that your supervisor is not comfortable. You ask your supervisor for advice on the...
A heat engine receives heat from a source at 1500 K at a rate of 600 kJ/s and rejects the waste heat to a sink at 300 K. If the power output of the engine is 400 kW, the second-law efficiency of this...
Diamond Walker sells homemade knit scarves for $25 each at local craft shows. Her contribution margin ratio is 60%. Currently, the craft show entrance fees cost Diamond $1,500 per year. The craft...

From the following information in respect of a company you are required to calculate the cost of

Question:

Step by Step Answer:

Financial Management

Students also viewed these Business questions