Question
PLEASE EXPLAIN FORMULAS AND SOLVE 1. Menger Corporation has a 0.4 probability of a return of -0.16, a 0.4probability of a rate of return of
PLEASE EXPLAIN FORMULAS AND SOLVE
1. Menger Corporation has a 0.4 probability of a return of -0.16, a 0.4probability of a rate of return of 0.08, and the remaining probability of a 0.50 rate of return.What is the expected rate of return of Menger Corporation?
2.What is the Net Present Value (NPV) of the following set of cash flows if the cost of capital is 0.02?
Co = -110
C01 = 200
C02 = 330
C03 = 80
3.Consider a company subject to a corporate tax rate of 0.6.If the company has a debt ratio of 0.3, and an unleveraged beta of 1.0, what is the company's leveraged beta?
4.Consider a company financed with 0.6 equity, 0.1 preferred stock, and the remaining debt subject to a corporate tax rate 0.5 If the required rate of return on the debt is 0.04, on the preferred stock is 0.08 and on the common stock is 0.15, what is the working average cost of capital for this company?
5.A stock is trading for 29, and just paid a dividend of 1.5 which is expected to grow at a fraction 0.10 per year.If Goldman Sacs charges a fraction 0.09 as a flotation cost, what is the required rate of return on a new stock issue?
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