FREE Trial
Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Suppose Tesla's asset beta is 1.2, its D/E (debt-equity ratio) is 1.5 and the US EMRP is 6%. If the 10 Year US Treasury rate

Suppose Tesla's asset beta is 1.2, its D/E (debt-equity ratio) is 1.5 and the US EMRP is 6%. If the 10 Year US Treasury rate is expected to be 2% in the foreseeable future, what should be the required rate of return on Tesla stock? Assume a 21% corporate tax rate.

9.20%

6.00%

17.73%

14.88%

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

Mergers Acquisitions And Other Restructuring Activities

Mergers Acquisitions And Other Restructuring Activities

Authors: Donald DePamphilis

10th Edition

0128150750, 978-0128150757

More Books

Students also viewed these Finance questions

Question

★★★★★
Predict the major product from each of the following reactions. (a) (b) (c) (d) (e) (f) (g) (h) (i) CH NH2, cat. HA N-H, cat. HA NH2 cat. HA PPha (1) HS SH (2) Raney Ni, H2 0 CH2PPha (excess) O. O...

Answered: 1 week ago

Question

★★★★★
Discuss why an organization might elect to use a separate, independent team for quality testing rather than the group of people who originally developed the software.

Answered: 1 week ago

Question

★★★★★
The production time, in minutes, of a manufacturing item is a continuous random variable X with density function for some suitable constants b and c. (i) If it is known that E(X) = 139, what are the...

Answered: 1 week ago

Question

★★★★★
On January 1, 2015, Paro Company purchases 80% of the common stock of Solar Company for $320,000. Solar has common stock, other paid-in capital in excess of par, and retained earnings of $50,000,...

Answered: 1 week ago

Question

★★★★★
The Bookbinder Company had $410,000 cumulative operating losses prior to the beginning of last year. It had $80,000 in pre-tax earnings last year before using the past operating losses and has...

Answered: 1 week ago

Question

★★★★★
A manufactured product has the following information for June. \ table [ [ , Standard Quantity and Cost,Actual Results ] , [ Direct materials, 6 pounds $ 9 per pound, 5 1 , 5 0 0 pounds @$ 9 . 2 0...

Answered: 1 week ago

Question

★★★★★
Morgan's Selling Price 135 Process 1 Process 2 Fixed Cost 110,000 45,000 Variable Cost. 40 100 Labor Hours / unit 4 10 Suppose that Morgan is going to produce at 1300 units and would choose Process...

Answered: 1 week ago

Question

★★★★★
From the movie Everest, Guide Rob Hall attempts to help his client, Beck Weathers, get across a chasm. Based on "Leading in Times of Uncertainty, analyze the extent to which this scene reflects...

Answered: 1 week ago

Question

★★★★★
3. The book uses 4 synonyms for the average of the outcome if you played a game over and over. The four synonyms are? 1. Variance 2. Semivariance 3. Systematic distributions 4. Asystematic...

Answered: 1 week ago

Question

★★★★★
An athlete runs a marathon, after which his muscles feel fatigued and unable to contract. The athlete asks the nurse why this happened. The nurse's response is based on the knowledge that the problem...

Answered: 1 week ago

Question

★★★★★
The Self - Appraisal Problem Leroy Washington, human resource director at Engel Products was faced with a problem that he had not experienced before and was uncertain how to proceed. The problem was...

Answered: 1 week ago

Question

★★★★★
You have heard the expression, Its not what you know, its who you know, thats important. Do you agree? If it is true, is it fair?

Answered: 1 week ago

Question

★★★★★
This chapter lists six networking objectives (see Networking section). For which of these reasons (or for what other reasons) do you have to network?

Answered: 1 week ago

Question

★★★★★
According to the two-dimensional leadership style studies (Chapter 6), a leaders behavior toward followers can be classified as either initiating structure or consideration or both or neither (Ohio...

Answered: 1 week ago

Previous Question Next Question