Estimate the Cost of Capital for Company XYZ based on the information below. $50.00 $1.60 Stock price: Dividend: Beta: 1.29 Shares outstanding: 5-year dividend growth: 100,000,000 7.55% Risk-free rate: 0.60% Market risk premium: 7.00% Debt Information (bonds outstanding) Book Value "Quoted Price" Maturity YTM $800,000,000 3/15/2025 4.0% 99.00 $200,000,000 2/1/2027 4.5% 130.00 $500,000,000 9/1/2042 5.0% 95.00 $900,000,000 10/15/2044 5.5% 90.00
Estimate the Cost of Capital for Company XYZ based on the information below. $50.00 $1.60 Stock price: Dividend: Beta: 1.29 Shares outstanding: 5-year dividend growth: 100,000,000 7.55% Risk-free rate: 0.60% Market risk premium: 7.00% Debt Information (bonds outstanding) Book Value "Quoted Price" Maturity YTM $800,000,000 3/15/2025 4.0% 99.00 $200,000,000 2/1/2027 4.5% 130.00 $500,000,000 9/1/2042 5.0% 95.00 $900,000,000 10/15/2044 5.5% 90.00
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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Question
![Estimate the Cost of Capital for Company XYZ based on the information below.
$50.00
$1.60
Stock price:
Dividend:
Beta:
1.29
Shares outstanding:
5-year dividend growth:
100,000,000
7.55%
Risk-free rate:
0.60%
Market risk premium:
7.00%
Debt Information (bonds outstanding)
Book Value
"Quoted Price"
Maturity
YTM
$800,000,000
3/15/2025
4.0%
99.00
$200,000,000
2/1/2027
4.5%
130.00
$500,000,000
9/1/2042
5.0%
95.00
$900,000,000
10/15/2044
5.5%
90.00](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fa69257e9-eb78-497a-8d7c-66cc7b6ce496%2F1e063d2a-ea8a-4880-8427-a84d8dfa2186%2F2ryvy.jpeg&w=3840&q=75)
Transcribed Image Text:Estimate the Cost of Capital for Company XYZ based on the information below.
$50.00
$1.60
Stock price:
Dividend:
Beta:
1.29
Shares outstanding:
5-year dividend growth:
100,000,000
7.55%
Risk-free rate:
0.60%
Market risk premium:
7.00%
Debt Information (bonds outstanding)
Book Value
"Quoted Price"
Maturity
YTM
$800,000,000
3/15/2025
4.0%
99.00
$200,000,000
2/1/2027
4.5%
130.00
$500,000,000
9/1/2042
5.0%
95.00
$900,000,000
10/15/2044
5.5%
90.00
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