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Assume the expected return is 10%, risk free rate is 2%, market risk is 4%. What is Pettijohns Beta? Pettijohn Inc. begin{tabular}{lrr} Balance Sheet (Millions
Assume the expected return is 10%, risk free rate is 2%, market risk is 4%. What is Pettijohns Beta?
Pettijohn Inc. \begin{tabular}{lrr} Balance Sheet (Millions of \$) & 2017 & 2016 \\ Assets & & \\ Cash and securities & 244 & 390 \\ Accounts receivable & 7,530 & 6,940 \\ Inventories & 10,980 & 9,570 \\ \hline Total current assets & 18,754 & 16,900 \\ Net plant and equipment & 17,990 & 18,230 \\ \hline Total assets & 36,744 & 35,130 \\ \hline \end{tabular} \begin{tabular}{lrr} Liabilities and Equity & & \\ Accounts payable & 6,990 & 6,850 \\ Notes payable & 5,320 & 5,900 \\ Accruals & 4,120 & 3,900 \\ \hline Total current liabilities & 16,430 & 16,650 \\ Long-term bonds & 10,920 & 10,920 \\ \hline Total debt & 27,350 & 27,570 \\ Common stock & 3,360 & 3,360 \\ Retained earnings & 6,034 & 4,200 \\ \hline Total common equity & 9,394 & 7,560 \\ \hline Total liabilities and equity & 36,744 & 35,130 \\ \hline \end{tabular} \begin{tabular}{lr} Income Statement (Millions of \$) & 2017 \\ Net sales & 51,561 \\ Operating costs except depr'n & 47,252 \\ Depreciation & 980 \\ \hline Earnings before interest and taxes (EBI) & 3,329 \\ Less interest & 508 \\ \hline Earnings before taxes (EBT) & 2,821 \\ Taxes & 987 \\ \hline Net income & 1,834 \\ \hline \end{tabular} Other data: Shares outstanding (millions) 175.00 Common dividends (millions) 825.15 Interest rate on notes payable \& L-T bonds 6.25% Federal plus state income tax rate 0.35 Year-end stock price 55.00 Tax rate 35.00% WACC 10.00% Step by Step Solution
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