Question
Please help with these. Thank you. Booher Book Stores has a beta of 0.9. The yield on a 3-month T-bill is 5% and the yield
Please help with these. Thank you.
Booher Book Stores has a beta of 0.9. The yield on a 3-month T-bill is 5% and the yield on a 10-year T-bond is 8%. The market risk premium is 7.5%, and the return on an average stock in the market last year was 13%. What is the estimated cost of common equity using the CAPM? Round your answer to two decimal places.
Summerdahl Resort's common stock is currently trading at $40 a share. The stock is expected to pay a dividend of $3.00 a share at the end of the year (D1 = $3.00), and the dividend is expected to grow at a constant rate of 5% a year. What is the cost of common equity? Round your answer to two decimal places.
Stock R has a beta of 1.6, Stock S has a beta of 0.45, the expected rate of return on an average stock is 10%, and the risk-free rate is 4%. By how much does the required return on the riskier stock exceed that on the less risky stock? Do not round intermediate calculations. Round your answer to two decimal places.
Burnwood Tech plans to issue some $60 par preferred stock with a 8% dividend. A similar stock is selling on the market for $75. Burnwood must pay flotation costs of 4% of the issue price. What is the cost of the preferred stock? Round your answer to two decimal places.
Shi Import-Export's balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi's tax rate is 25%, rd = 6%, rps = 5.9%, and rs = 14%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC? Round your answer to two decimal places.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started