FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Amazon has a beta of 0.9. The risk-free rate is 2.3% and the expected return on the S&P500 is 8%. What is Amazon's cost of

Amazon has a beta of 0.9. The risk-free rate is 2.3% and the expected return on the S&P500 is 8%.

  1. What is Amazon's cost of equity?
  2. Now assume that the expected market risk premium is 8%. What is Amazon's cost of equity?

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image_2

Step: 3

blur-text-image_3

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Developments In Entrepreneurial Finance And Technology

Developments In Entrepreneurial Finance And Technology

Authors: David B. Audretsch, Maksim Belitski, Nada Rejeb, Rosa Caiazza

1st Edition

1800884338,1800884346

More Books

Students also viewed these Finance questions

Question

★★★★★
A hot iron horseshoe (mass = 0.40kg), just forget (Fig. 14-16). Is dropped into 1.35L of water in a 0.30-kg iron port initially at 20.0oC if the final equilibrium temperature is 25.0o C, estimate the...

Answered: 1 week ago

Question

★★★★★
stion 25 of 65 June 2018, Patricia purchased and placed a rental house in service. She paid $175,000, including $35,000 for the lan compute her 2018 depreciation on the rental. $1,808 $2,758 $3,448...

Answered: 1 week ago

Question

★★★★★
3 Are there any more general lessons to be drawn for companies from the approach to expansion from Africas leading mobile telephone companies?

Answered: 1 week ago

Question

★★★★★
You hold an auction on eBay and expect two bidders to show up. You estimate that each bidder has a value of either $5 or $8 for the item, and you attach probabilities to each value of 50%. Your own...

Answered: 1 week ago

Question

★★★★★
The following information is available concerning the historical risk and return relationships in the U.S. capital markets: U.S. CAPITAL MARKFTS TOTAI ANNIAL RFTIRNE. 10003015 a. Explain why the...

Answered: 1 week ago

Question

★★★★★
LPE Inc. is experiencing a period of rapid growth. Earnings per share is expected to grow at a rate of 12 percent during the next three years, 10 percent in the fourth year, 7 percent in the fifth...

Answered: 1 week ago

Question

★★★★★
Reggie has been tasked with scheduling a meeting with all of the team leads in his division. He reserved a conference room and has just arrived to set up the room. At the same time, Cathy arrives....

Answered: 1 week ago

Question

★★★★★
The risk-free rate of return is 5%, the expected rate of return on the market portfolio is 12%, and the stock of Exotic Foods Corporation has a beta coefficient of 0.8. Exotic Foods pays out 70% of...

Answered: 1 week ago

Question

★★★★★
Question 7 Not checked Mark 1.00 out of 20.00 P Flag question Take me to the text On November 1, 2018, Precision Machinery purchased equipment for $117,000. The equipment is expected to last 5 years...

Answered: 1 week ago

Question

★★★★★
Muy Bueno Bakery sells its special chocolate cake for $ 1 8 variable cost is $ 3 . The desired profit is $ 2 per unit. What is the markup percentage ( rounded to the nearest percent ) on product...

Answered: 1 week ago

Question

★★★★★
Instructions: Interview a manager in a role that is responsible for supervising staff and prepare a report summarizing the interview: 1. You will need approximately 30. minutes to interview the...

Answered: 1 week ago

Previous Question Next Question