Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Can you help me solve Q#3 and #6 The US government T-bill has a yield of 4.27%, the Wilshire 5000 is expected to yield 10.21%,

Can you help me solve Q#3 and #6

image text in transcribed

The US government T-bill has a yield of 4.27%, the Wilshire 5000 is expected to yield 10.21%, and a stock's beta is 2.4. If inflation is expected to increase by 1.48 percentage points next year, but everything else remains the same, what will the new cost of retained earnings be? Round the answer to two decimals in percentage form. Please write \% sign in the "unites" box. Answer: 39.62(20.01)% Question 4 1/1 point A method of determining a company's cost of retained earning is the own bond plus risk premium approach. This approach assumes that the risk of a company is embedded in its bond yield and the required retained earning yield is the company's bond yield plus a risk premium. If a company has BBB rated bonds with a yield of 6.81% and the risk premium is 2.05%, what is the company's cost of retained earnings? Round the answer to two decimals in percentage form. Please write \% sign in the "unites" box. Answer: 8.86% Question 5 1/1 point Shoop Bank has an average WACC of 13.02% and adjusts for risk by adding 2.14% to its average WACC. If Shoop considers a business loan above average risk, what is Shoop's risk adjusted WACC for a business loan? Round the answer to two decimals in percentage form. Please write \% sign in the "unites" box. Answer: 15.16% Question 6 0/1 point Sarapo Inc. bonds are trading at their par value of $1,000 and pay interest 3 times a year. If each interest payment is $5.07 what is Sarapo's before-tax component cost of debt? Round the answer to two decimals in percentage form. Please write \% sign in the "unites" box. Answer: 0.51(1.52)%

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

Step: 3

blur-text-image

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

The Legal Environment Today Summarized Case Edition

Authors: Roger LeRoy Miller

8th Edition

130526276X, 978-1305279407, 1305279409, 978-1305704930, 1305704932, 978-1305262768

More Books

Students also viewed these Finance questions