Answered step by step
Verified Expert Solution
Question
1 Approved Answer
You are planning on selling 100,000 shares to finance your business. You have promised investors that you can pay them dividends of $100 per year
You are planning on selling 100,000 shares to finance your business. You have promised investors that you can pay them dividends of $100 per year for the next 20 years only, after which you will have to stop paying them dividends. The return on the stock market on average has been 8% in the past several years. The risk-free rate is about 3%, and the B for your firm is 2.5. How much money do you think you can raise for your firm: $72.41 million $60.90 million OOOO $64.52 million O $15.50 million You own 200 shares of Google, 400 shares of Apple, and 300 shares of Netflix. Shares of these firms are trading at $18.601, $12.85, and $43.90 respectively. It is expected that these firms will earn returns of 11%, 6%, and 17% over the next year. The return on your portfolio of investments is expected to be 13.42% 11.56% 12.97% 0 10.03% Assume the risk-free rate is 8%. Stock A has a of 1.8 and a return of 25% and Stock B has a of 1.2 and a return of 30%. If the return on the stock market is 13%, the return per unit risk for stocks A and B in equilibrium will be: 5.00% and 5.00%, respectively 18.33% and 9.44%, respectively 9.44% and 9.44%, respectively 9.44% and 18.33%, respectively
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