Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Hello these are Accounting questions please answer the questuins and show me your work and how you get the answer as soon as possible Q1)

Hello these are Accounting questions

please answer the questuins and show me your work and how you get the answer as soon as possible

Q1)

Assume that a company has a beta of .85 and the risk-free rate is 4%. If the market risk premium is 8% calculate cost of equity capital, using the capital asset pricing model.

Select one:

A. 12.88%

B. 8.00%

C. 6.80%

D. 10.80%

Q2)

Determine the present value of an 8 year annuity that pays $11,000 at the end of each year discounted at a rate of 6%.

Select one:

A. $69,015

B. $66,000

C. $88,000

D. $68,308

Q3)

George forecasts a $1.00 dividend for 2017, $1.10 dividend for 2018 and a $1.20 dividend for 2019 for Mikayla Corporation. For all years after 2019, George forecasts that Mikayla Corporation will pay a $1.30 dividend. Using the dividend discount valuation model, determine the intrinsic value of Mikayla Corporation, assuming the companys cost of equity capital is 8%.

Select one:

A. $18.33

B. $15.72

C. $16.25

D. $14.57

Q4)

The following data pertains to Radek Corp., a manufacturer of office supplies. Dollar amounts in thousands.

Total assets

$8,731

Interest-bearing debt

$4,239

Average borrowing rate for debt

10.0%

Common equity:

Book value

$3,130

Market value

$16,284

Marginal income tax rate

35%

Market equity beta

1.33

Assuming that the risk-free rate is 5.3% and the market risk premium is 7.3%, calculate Radek's cost of equity capital, using the capital asset pricing model.

Select one:

A. 14.35%

B. 15.01%

C. 9.71%

D. 7.05%

Q5)

The following data pertains to Radek Corp., a manufacturer of office supplies. Dollar amounts in thousands.

Total assets

$8,731

Interest-bearing debt

$4,239

Average borrowing rate for debt

10.0%

Common equity:

Book value

$3,130

Market value

$16,284

Marginal income tax rate

35%

Market equity beta

1.33

Calculate Radek's cost of debt capital.

Select one:

A. 10.00%

B. 6.50%

C. 3.50%

D. 13.30%

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

Cost Accounting A Managerial Emphasis

Authors: Charles T. Horngren, Srikant M.Dater, George Foster, Madhav

13th Edition

8120335643, 136126634, 978-0136126638

More Books

Students also viewed these Accounting questions