What is cost of equity on these financial accounting question? The risk-free rate on 10-year U.S. Treasury bills is 3%and the expected rate of return on the overall stockmarket is 11%. The company has a beta of 1.6. What isthe cost of equity?

Step 1: Given Value for Calculation Risk free Rate = rf = 3%Market Return = rm = 11%Beta = b = 1.6…

Answered: The risk-free rate on 10-year U.S.…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

A firm just paid its annual dividend of $5.50 per share. The stock market price of $58.25 and a beta of 1.15. The return on the U.S. Treasury bill is 2% and the market risk premium is 9%. What is the cost of equity?
Treasury bills currently have a return of 3.5% and the market risk premium is 8%. If a firm has a beta of 1.6, what is its cost of equity?
Earnings this year will be $6 per share, and investors expect a rate of return of 8% on stocks facing the same risks as Web Cites. a. What is the sustainable growth rate? b. What is the stock price? c. What is the present value of growth opportunities (PVGO)? d. What is the P/E ratio? e. What would the price and P/E ratio be if the firm paid out all earnings as dividends? (Do not round intermediate calculations. Round your answers to 2 decimal places.) > Answer is complete but not entirely correct. a. Sustainable growth rate 2.00 % b. Stock price $ 91.84 x C. PVGO $ (13.78) X d. P/E ratio 10.20 x e. Price $ 75.00 P/E ratio 12.50
Opt-In Inc. has an expected rate of return on equity next year, ROE₁, equal to 10% and a dividend payout ratio next year, DPY₁, equal to 50%. Opt-In Inc.'s equity beta is equal to 1 and the company is expected to pay dividend per share next year, DPS₁, equal to $1. The long-run risk-free rate is equal to 5% while the stock market risk premium is equal to 5%. If Opt-In Inc. double their dividend payout ratio next year to 100% then their intrinsic equity value per share will be equal to: $40.00 $30.00 $10.00 $20.00
Smathers Corp. stock has a beta of 1.23. The market risk premium is 7.00% and the risk- free rate is 2.86% annually. What is the company's cost of equity?
A company is expected to pay a dividend of D1 = $1.45 per share at the end of the year, and that dividend is expected to grow at a constant rate of 6.00% per year in the future. The company's beta is 1.15, the market risk premium is 5.50%, and the risk-free rate is 4.00%. What is the company's current stock price today?
The future earnings, dividends, and common stock price of Callahan Technologies Inc. are expected to grow 6% per year. Callahan's common stock currently sells for $22 per share; its last dividend was $2.00; and it will pay a $2.12 dividend at the end of the current year. 1. Using the DCF approach, what is its cost of common equity? 2. If the firm's beta is 1.2, the risk-free rate is 6%, and the average return on the market is 13%, what will be the firm's cost of common equity using the CAPM approach? Round your answer to two decimal places. 3. If the firm's bonds earn a return of 11%, based on the bond-yield-plus-risk-premium approach, what will be rs? Use the midpoint of the risk premium range discussed in Section 10-5 in your calculations.
Please provide correct answer the financial accounting question
Smathers Corp. stock has a beta of 1.24. The market risk premium is 6.90 percent and the risk-free rate is 2.82 percent annually. What is the company's cost of equity?
The expected rate of return on a market portfolio is 7 percent. The riskless rate of interest is 4 percent. The beta of a company is 1.37. What is the required rate of return on this company's common equity?
Company Z is expected to pay a dividend of D1 = $2.20 per share at the end of the year, and that dividend is expected to grow at a constant rate of 4.00% per year in the future. The company's beta is 1.3, the Market Risk Premium is 6.00%, and the risk-free rate is 3.00%. What is the company's current stock price? Group of answer choices 32.35 35.59 27.50 36.67 55.00
Your estimate of the market risk premium is 6%. The risk-free rate of return is 1% and General Motors has a beta of 1.79. What is General Motors' cost of equity capital?

SEE MORE QUESTIONS

Recommended textbooks for you

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

FINANCIAL ACCOUNTING

Accounting

ISBN:

9781259964947

Author:

Libby

Publisher:

MCG

Accounting

ISBN:

9781337272094

Author:

WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.

Publisher:

Cengage Learning,

Accounting Information Systems

Accounting

ISBN:

9781337619202

Author:

Hall, James A.

Publisher:

Cengage Learning,

Horngren's Cost Accounting: A Managerial Emphasis…

Accounting

ISBN:

9780134475585

Author:

Srikant M. Datar, Madhav V. Rajan

Publisher:

PEARSON

Intermediate Accounting

Accounting

ISBN:

9781259722660

Author:

J. David Spiceland, Mark W. Nelson, Wayne M Thomas

Publisher:

McGraw-Hill Education

Financial and Managerial Accounting

Accounting

ISBN:

9781259726705

Author:

John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS

The risk-free rate on 10-year U.S. Treasury bills is 3% and the expected rate of return on the overall stock market is 11%. The company has a beta of 1.6. What is the cost of equity?