Application Problem Set 6 - Quiz Application Problem Set 6 - Quiz 1. Caballos, Inc., has a debt to capital ratio of 47%, a beta of 1.6 and a pre-tax cost of debt of 7.2%. The firm had earnings before interest and taxes of $ 572 million for the last fiscal year, after depreciation charges of $ 226 million. The firm had capital expenditures of $ 379 million, and non-cash working capital increased by $ 54 million. The firm also had a book value of capital of $ 1.1 billion at the beginning of the last fiscal year. (The treasury bond rate is 3.3 %, the market risk premium is 5.5 % and the firm has a tax rate of 40 %). Assume that the firm is in stable growth, and that the return on capital and reinvestment rates for the last fiscal year can be sustained forever.Estimate the Cost of Equity.

Caballos, Inc., has a debt to capital ratio of 30%, a beta of 1.33 and a pre-tax cost of debt of 7.5%. The firm had earnings before interest and taxes of $ 605 million for the last fiscal year, after depreciation charges of $ 310 million. The firm had capital expenditures of $ 360 million, and non-cash working capital increased by $ 50 million. The firm also had a book value of capital of $ 2 billion at the beginning of the last fiscal year. (The treasury bond rate is 5.01 %, the market risk premium is 6.3 % and the firm has a tax rate of 40 %). Assume that the firm is in stable growth, and that the return on capital and reinvestment rates for the last fiscal year can be sustained forever.Estimate the Value of the Firm. Application Problem Set 6 - Quiz Caballos, Inc., has a debt to capital ratio of 47%, a beta of 1.6 and a pre-tax cost of debt of 7.2%. The firm had earnings before interest and taxes of $ 572 million for the last fiscal year, after depreciation charges of $ 226 million. The firm had capital expenditures of $ 379 million, and non-cash working capital increased by $ 54 million. The firm also had a book value of capital of $ 1.1 billion at the beginning of the last fiscal year. (The treasury bond rate is 3.3 %, the market risk premium is 5.5 % and the firm has a tax rate of 40 %). Assume that the firm is in stable growth, and that the return on capital and reinvestment rates for the last fiscal year can be sustained forever.Estimate the Cost of Equity. Application Problem Set 6 - Quiz 2.Caballos, Inc., has a debt to capital ratio of 47%, a beta of 1.6 and a pre-tax cost of debt of 7.2%. The firm had earnings before interest and taxes of $ 572 million for the last fiscal year, after depreciation charges of $ 226 million. The firm had capital expenditures of $ 379 million, and non-cash working capital increased by $ 54 million. The firm also had a book value of capital of $ 1.1 billion at the beginning of the last fiscal year. (The treasury bond rate is 3.3 %, the market risk premium is 5.5 % and the firm has a tax rate of 40 %). Assume that the firm is in stable growth, and that the return on capital and reinvestment rates for the last fiscal year can be sustained forever.Estimate the Cost of Equity. 3.Application Problem Set 6 - Quiz Caballos, Inc., has a debt to capital ratio of 30%, a beta of 1.23 and a pre-tax cost of debt of 5.4%. The firm had earnings before interest and taxes of $ 794 million for the last fiscal year, after depreciation charges of $ 244 million. The firm had capital expenditures of $ 351 million, and non-cash working capital increased by $ 41 million. The firm also had a book value of capital of $ 1.1 billion at the beginning of the last fiscal year. (The treasury bond rate is 3.6 %, the market risk premium is 6.5 % and the firm has a tax rate of 40 %). Assume that the firm is in stable growth, and that the return on capital and reinvestment rates for the last fiscal year can be sustained forever.Estimate the Cost of Capital.

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Application Problem Set 6 - Quiz Caballos, Inc., has a debt to capital ratio of 47%, a beta of 1.36 and a pre-tax cost of debt of 5.1%. The firm had earnings before interest and taxes of $ 624 million for the last fiscal year, after depreciation charges of $ 200 million. The firm had capital expenditures of $ 291 million, and non-cash working capital increased by $ 48 million. The firm also had a book value of capital of $ 1.8 billion at the beginning of the last fiscal year. (The treasury bond rate is 4.2 %, the market risk premium is 5.6 % and the firm has a tax rate of 40 %). Assume that the firm is in stable growth, and that the return on capital and reinvestment rates for the last fiscal year can be sustained forever.Estimate the Return on Capital. Answer format is to 4 decimal places (0.1234)