As an analyst, you were task to compute for the WACC of various companies given the following information. Income tax rate is 30%.Risk free rateBetaMarket returnDebt to equity ratioDettmarginAccentureCo.4%1.2512%2.502%Nestle Co.3%1.511%3.003%Which compeny nes the nighest cost of equity?FedEx Co.2%1.310%4.002.50%Cadence Co.3.50%1.48%3.501.50%

Cost of equity of each company is calculated using following equation Cost of equity = Risk free…

As an analyst, you were task to compute for the WACC of various companies given the following information. Income tax rate is 30%. Risk free rate Beta Market Debt to equity ratio Debt margin Accenture Co. 1.25 2.50 2% Nestle Co. 3% 1.5 3.00 3% Which company has the highest cost of equity? FedEx Co. 2% 1.3 10% 4.00 2.50% Cadence Co. 3.50% 1.4 8% 1.50%

As an analyst, you were task to compute for the WACC of various companies given the following information. Income tax rate is 30%. Risk free rate Beta Market Debt to equity ratio Debt margin Accenture Co. 1.25 2.50 2% Nestle Co. 3% 1.5 3.00 3% Which company has the highest cost of equity? FedEx Co. 2% 1.3 10% 4.00 2.50% Cadence Co. 3.50% 1.4 8% 1.50%

Essentials Of Investments

11th Edition

ISBN:9781260013924

Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.

Chapter1: Investments: Background And Issues

Section: Chapter Questions

Problem 1PS

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TOPIC WEIGHTED AVERAGE If a company issues common stock and coupon bonds and the debt-to-equity ratio are 0.85, the cost of equity is 12% and the pretax cost of debt is 7%. What is the weight of the company’s equity if the tax rate is 40%?
A. You are analyzing the price/book value ratios for seven firms in the hospitality industry, relative to returns on equity and required rates of return. The treasury bond rate is 6% and the market premium is 3%. The data on the companies are the following: Company P/BV ROE Beta A 0.50 9.0% 0.75 1.10 8.5% 0.80 1.20 7.0% 1.30 0.65 12.5% 0.70 1.50 16.0% 0.85 0.90 10.0% 1.40 1.00 18.5% 0.85 i. ii. B C D E F G Compute the average P/BV ratio, return on equity, and beta for the industry. Based upon these averages, is the hospitality industry under or overvalued according to book values assuming that the industry overall is in stable growth?
FINANCE PLEASE ANSWER C & D
Domino’s Pizza, Inc. (DPZ)’s return on equity (ROE) is closest to A. 20.14%. B. 17.46%. C. 15.49%. D. 11.41%.
Give typing answer with explanation and conclusion If the company were to borrow more (or less), how would that impact the cost of debt and the WACC? Provide a specific assumed example. Weight of Equity 76.10% Weight of Debt 23.90% Cost of Equity 6.98% Cost of Debt 2.55% Tax Rate WACC 5.92%
Example The following data were assembled for General Stores Corporation: Equity (Market Risk) Premium: 4.9% Size Premium: 1.8% Value Premium: 3.0% Current Risk-Free Rate: 3.5% Market Beta: 1.05 Size Beta: -0.315 Value Beta: -0.224 Using the data above, estimate General Stores' cost of equity using the Fama- French Model.
M3
Question: Fama's Llamas has a weighted average cost of capital of 9.5%. The company's cost of equity is 11%, and its cost of debt is 7.5%. The tax rate is 40%. What is the company's debt- equity ratio? (Do not round intermediate calculations and round your answer to 4 decimal places, e.g., 32.1616.)
Aneka Inc. hire your consulting firm to help them estimate the cost of equity. Yield of Aneka Inc. bonds is 7.25%, and the economist company in your company believes that the cost equity can be estimated using a risk premium of 3.50% over the company's cost of debt. What is Lange's estimated cost of equity from retained earnings? a. 10.75% b. 11.18% c. 11.63% d. 12.09% e. 12.58%
Based on the following numbers, calculate the firm’s WACC, explaining in detail each step in your calculations and the formulas that you are using. You may find it useful to complete this task in Excel and include the Excel table in your response. Cost of debt (averaging over all the forms of debt used): 12%. Risk-free rate on Treasury Bonds: 5%. Expected return on the domestic portfolio: 9%. Effective tax rate: 20%. Share of debt in optimal capital structure: 65%. Share of equity in optimal capital structure: 35%. Beta: 1.2
If a bank has the following ratios, it can pay up to of its earnings as dividends. Tier 1 leverage = 4.7% Tier 1 common equity risk-based = 7.2% %3D Tier 1 risk-based 8.3% Total capital risk-based = 11%
The following were gathered for estimating the cost of equity of KKK Corporation: Return on Treasury Bonds = 4%; Return on the Market = 10%; Return on KKK Bonds = 6%. Upon analysis, you determined that the beta of KKK shares relating to the market return is 1.2 while a risk premium of 4% should be given to KKK's investors over its creditors. How much is the cost of equity using the capital asset pricing model?

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