Ramsay Films has two businesses making movie and running theatres. The movie - making business has an unlevered beta of 1.1 and the theatres business has an unlevered beta of 0.9. The firm has equal weight in both businesses and a debt - equity ratio of 0.2. The risk - free rate is 6% and the market risk premium is 5%. The firm just paid a dividend of Rs. 7 per share out of its total earnings of Rs. 10 per share. The ROE for the first is 20%. If the firm is already stable, what is the value of its shares? The tax rate is 30%. a. 108.48 b. 130.18 с. 118.34 d. 141.27
Ramsay Films has two businesses making movie and running theatres. The movie - making business has an unlevered beta of 1.1 and the theatres business has an unlevered beta of 0.9. The firm has equal weight in both businesses and a debt - equity ratio of 0.2. The risk - free rate is 6% and the market risk premium is 5%. The firm just paid a dividend of Rs. 7 per share out of its total earnings of Rs. 10 per share. The ROE for the first is 20%. If the firm is already stable, what is the value of its shares? The tax rate is 30%. a. 108.48 b. 130.18 с. 118.34 d. 141.27
Chapter3: Evaluation Of Financial Performance
Section: Chapter Questions
Problem 13P
Question
Ramsay Films has two businesses making movie and running theatres. The movie - making business has an unlevered beta of 1.1 and the theatres business has an unlevered beta of 0.9. The firm has equal weight in both businesses and a debt - equity ratio of 0.2. The risk - free rate is 6% and the market risk premium is 5%. The firm just paid a dividend of Rs. 7 per share out of its total earnings of Rs. 10 per share. The
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