21.08.2019
 Stock and Points Query Essay

Query 1

1 . В

Jack's Construction Co. offers 80, 500 bonds exceptional that are providing at par value. Bonds with comparable characteristics are yielding eight. 5%. The company also has 4 million stocks of common stock exceptional. The inventory has a beta of 1. one particular and provides for $40 a share. The U. S. Treasury bill is yielding 4% and the industry risk superior is 8%. Jack's tax rate is usually 35%. Precisely what is Jack's weighted average cost of capital? Response

| | several. 10%

| | 7. 39%

| | twelve. 38%

| | twelve. 65%

| | 10. 37%

one particular points В

Problem 2

1 . В

Peter's Audio Shop includes a cost of debt of seven percent, a cost of equity of 11%, and a cost of preferred inventory of 8%. The company has 104, 000 stocks of common stock outstanding at an industry price of $20 a share. You will find 40, 000 shares of preferred stock outstanding for a market selling price of $34 a reveal. The bond issue contains a total confront value of $500, 1000 and markets at 102% of confront value. The tax price is 34%. What is the weighted common cost of capital for Peter's Audio Store? Answer

| | 6. 14%

| | 6. 54%

| | 8. 60%

| | 9. 14%

| | 9. 45%

1 points В

Question a few

1 . В

Phil's Carvings, Inc. wants to have a measured average cost of capital of 9%. The firm posseses an after-tax cost of debt of 5% and a cost of equity of 11%. What debt-equity proportion is needed pertaining to the company to achieve the targeted weighted average expense of capital? Response

| |. 33

| |. 40

| |. 40

| |. 60

| |. 67

1 points В

Question four

1 ) В

Jake's Sound Devices has 210, 000 shares of prevalent stock outstanding at an industry price of $36 a share. A month ago, Jake's paid an annual dividend in the volume of $1. 593 every share. The dividend development rate can be 4%. Jake's also has six, 000 a genuine outstanding having a face value of $1, 000 per bond. The bonds take a 7% coupon, pay out interest annually, and mature in some. 89 years. The a genuine are selling for 99% of face benefit. The company's taxes rate is 34%. What is Jake's weighted average cost of capital? Answer

| | a few. 3%

| | five. 8%

| | 6th. 3%

| | 6th. 9%

| | 7. 2%

1 points В

Issue 5

1 . В

The Consolidated Transfer Company. is a great all-equity borrowed firm. The beta is usually. 75, the market risk high quality is 8% and the risk-free rate is 4%. Precisely what is the expected return of Consolidated? Response

| | 7%

| | 8%

| | 9%

| | 10%

| | 13%

1 points В

Question six

1 . В

Presuming the CAPM or one-factor model keeps, what is the price tag on equity for the firm if the firm's collateral has a beta of 1. two, the free of risk rate of return is usually 2%, the expected returning on the market can be 9%, as well as the return to you can actually debt can be 7%? Response

| | 15. 4%

| | 10. 8%

| | doze. 8%

| | 14. 4%

| | None of the over.

1 details В

Question several

1 . В

The cost of equity pertaining to Ryan Corporation is almost 8. 4%. In case the expected returning on the market is definitely 10% and the risk-free charge is 5%, then the collateral beta is definitely ___. Response

| | 0. 48

| | 0. 68

| | 1 . 25

| | 1 . 68

| | Not possible to calculate with data given.

you points В

Query 8

1 . В

The Template Company has an fairness beta of 1. 2 and a financial debt beta of. 8. The firm's the true market value debt to equity proportion is. six. Template provides a zero taxes rate. What is the advantage beta? Solution

| | zero. 70

| | 0. 72

| | zero. 96

| | 1 ) 04

| | 1 . 05

1 points В

Problem 9

1 . В

The NuPress Valet Co. has an superior version of its motel stand. The investment cost is expected to become $72 , 000, 000 and will returning $13. five million for 5 years in net cash moves. The ratio of financial debt to value is you to 1. The cost of equity is 13%, the expense of debt is usually 9%, plus the tax price is 34%. The appropriate low cost rate, assuming average risk, is: Response

| | almost eight. 65%

| | 9%

| | 9. 47%

| | 10. 5%

| | 13%

one particular points В

Query 10

1 . В

Assume that you are a specialist to Broske Inc., and you have been...