Business, 24.12.2019 17:31 velaskawallv
True or false: it is free for a company to raise money through retained earnings, because retained earnings represent money that is left over after dividends are paid out to shareholders.
true
false
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explanation:
the current risk-free rate of return is 3.80% and the current market risk premium is 6.10%. blue hamster manufacturing inc. has a beta of 1.56. using the capital asset pricing model (capm) approach, blue hamster’s cost of equity is selector 1
13.99%
14.65%
13.32%
17.32%
.
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explanation:
fuzzy button clothing company is closely held and, as a result, cannot generate reliable inputs for the capm approach. fuzzy button’s bonds yield 10.20%, and the firm’s analysts estimate that the firm’s risk premium on its stock relative to its bonds is 3.50%. using the bond-yield-plus-risk-premium approach, the firm’s cost of equity is selector 1
13.01%
17.13%
13.70%
15.07%
.
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explanation:
the stock of cute camel woodcraft company is currently selling for $25.67, and the firm expects its dividend to be $1.38 in one year. analysts project the firm’s growth rate to be constant at 7.20%. using the discounted cash flow (dcf) approach, cute camel’s cost of equity is estimated to
16.98%
13.21%
12.58%
11.95%
.
points:
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explanation:
it is often difficult to estimate the expected future dividend growth rate for use in estimating the cost of existing equity using the dcf approach. in general, there are three available methods to generate such an estimate:
• carry forward a historical realized growth rate, and apply it to the future.
• locate and apply an expected future growth rate prepared and published by security analysts.
• use the retention growth model.
suppose cute camel woodcraft company is currently distributing 70.00% of its earnings in the form of cash dividends. it has also historically generated an average return on equity (roe) of 12.00%. cute camel woodcraft company’s estimated growth rate
11.70%
3.60%
12.30%
42.00%
Answers: 1
Business, 22.06.2019 06:40, lexhorton2002
Burke enterprises is considering a machine costing $30 billion that will result in initial after-tax cash savings of $3.7 billion at the end of the first year, and these savings will grow at a rate of 2 percent per year for 11 years. after 11 years, the company can sell the parts for $5 billion. burke has a target debt/equity ratio of 1.2, a beta of 1.79. you estimate that the return on the market is 7.5% and t-bills are currently yielding 2.5%. burke has two issuances of bonds outstanding. the first has 200,000 bonds trading at 98% of par, with coupons of 5%, face of $1000, and maturity of 5 years. the second has 500,000 bonds trading at par, with coupons of 7.5%, face of $1000, and maturity of 12 years. kate, the ceo, usually applies an adjustment factor to the discount rate of +2 for such highly innovative projects. should the company take on the project?
Answers: 1
Business, 22.06.2019 20:00, jessicaortiz6
Suppose a country's productivity last year was 84. if this country's productivity growth rate of 5 percent is to be maintained, this means that this year's productivity will have to be:
Answers: 2
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