Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

I need to solve 19,21,22 and 23 Zelo, inc, stock has a beta or 1.23. The risk-free rate of return is 4.5% and the market

image text in transcribed

I need to solve 19,21,22 and 23

Zelo, inc, stock has a beta or 1.23. The risk-free rate of return is 4.5% and the market rate of return is 10%. What is the amount of the risk premium on Zelo stock? A) 11 27% B) 5.50% C) 6.77% D) 12 30% E) 5.54% The process of eliminating systematic risk through the purchase of a number of assets called: A) The beta principle B) Portfolio diversification. C The systematic risk principle D) The risk-reward slope. E) Portfolio reduction. A firm has a WACC of 12%. It is financed with 40% debt and 60% equity. The firm's cost of 10% and its tax rate is 40%. If the firm's dividend growth rate is 8% and its current stock pr $40, what is the value of the next dividend the firm is expected to pay? A) Greater than $4.25. B) Between $3.01 and $3.50, inclusive. C) Between $3.51 and $4.25, inclusive. D) Less than $3.00. E) Cannot be determined without additional information. Backyard Tavern has a beta of 1.5 and a cost of equity of 13.2 percent. The risk-free rate of return is 4.2 percent. Backyard is considering a project with a beta of 1.7 and a project life of eight year. An appropriate discount rate for the project is: A) 18.00 percent. B) 14.40 percent. C) 10.80 percent. D) 15.84 percent. E) 12.16 percent. A Kinston firm faces direct costs of 8% the amount of cash raised new security sales. How much capital needs to be raised if initial project outlays total $6 million? A) $6, 480 million B) $5, 520 million C) $6, 522 million D) $6, 640 million E) $6, 750 million

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

Financial Management Theory And Practice

Authors: Prasanna Chandra

8th Edition

0071078401, 978-0071078405

More Books

Students also viewed these Finance questions