Finance problems regarding the CAPM formula and WACC formula?

Answers:3   |   LastUpdateAt:2015-03-13 02:09:46  

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AD
Asked at 2012-08-26 07:22:19
I have problems to solve these four problems in my task of Finance, I have tried several times, but still could not find the right answer. MedlinePlus MedlinePlus 1. A company is 40% funded by risk-free debt. The interest rate is 10%, the market risk premium is 8% expected, and the beta of the common stock of the company is 0.5. MedlinePlus MedlinePlus Requirement 1: MedlinePlus What is the company cost of capital? MedlinePlus MedlinePlus CAPM formula I used in this% on, 10 * 0.4 + 0.5 (8% +10% +10% * 0.4 * 0.4), obtained 12%, bad, I tried to put the numbers in the answer box, 10%, 8%, 6% all evil. MedlinePlus MedlinePlus MedlinePlus Requirement 2: MedlinePlus Suppose the firm pays tax at the rate of 35%. What is the after-tax WACC? MedlinePlus MedlinePlus I could not understand what is the ratio of equity and debt in this ... MedlinePlus MedlinePlus MedlinePlus MedlinePlus 2. Nero Violins has the following capital structure: MedlinePlus MedlinePlus MedlinePlus Security Beta Total market value ($ Millions) MedlinePlus Debt 0 MedlinePlus $ 100 Preferred Stock 0.20 40 MedlinePlus Common shares 299 1.20 MedlinePlus MedlinePlus Required: MedlinePlus (A)
What is the beta of the company's assets? (Hint: What is the beta of a portfolio of all securities of the Company) (. Round your answer to two decimal places) MedlinePlus MedlinePlus MedlinePlus MedlinePlus (B)
Assume that the CAPM is the interest rate and risk-free right and a 5% market risk premium of 6%. What discount rate should Nero set for investments to expand the scale of its operations without changing its asset beta? (Round your answer to two decimal places. Omit the "%" sign in your response.) MedlinePlus MedlinePlus The problem I'm completely stuck ... MedlinePlus MedlinePlus MedlinePlus 3. Binomial Tree Farm Financing includes $ 5 million in bank loans. Their common heritage is shown in the Annual Report of the Binomial to $ 6,670,000. Has 500,000 shares outstanding, which trade on the Stock Wichita at $ 18 per share. MedlinePlus MedlinePlus Required: MedlinePlus Calculation of debt and equity ratio MedlinePlus MedlinePlus Debt Ratio = 5 / (5 +6.67 +9) = 24% wrong .... ($ 18 * 500000 = 9000000) MedlinePlus Equity Ratio = 6.67 9/5 6.67 +9 = 27% bad ... MedlinePlus MedlinePlus I'm stuck MedlinePlus MedlinePlus MedlinePlus 4. An oil company is drilling a series of new wells on the perimeter of an oil producing field. About 20% of the new wells will be dry holes. Even if a new well strikes oil, there is still uncertainty about the amount of oil produced: 40% of new oil wells producing only 1,000 barrels per day strike, 60% produce 5,000 barrels per day MedlinePlus. MedlinePlus Required: MedlinePlus Projected annual cash income of a new perimeter well. Use a future oil price of $ 50 per barrel. (Write your answer in dollars, not millions. Omit the "$" sign in your response.) MedlinePlus MedlinePlus This I have no idea ... MedlinePlus MedlinePlus Please help! : (
Answer1PhilippaAnswered at 2012-07-16 05:35:03
Only Texas residents may have a driver's license issued by the state of Texas.That is the same for where you live. If Dad driving commercial trucks in Texas and you want to drive commercial trucks in Texas then you must establish residency in the state of Texas. Therefore, moving to Texas and then obtain CDL and bring it to commercial trucks in the state of Texas. So , what 's the problem? I do not understand your question of how to obtain a Texas driver's license . You must live in the same as any state of Texas. Only residents of each state are licensing by the state government agency that has licensing .
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