The Rhaegel Corporation's common stock has a beta of 11. If the risk-free rate is 5.1 percent and the expected return on the market Is 13 percent, what Is the company's cost of equity capital? (Do not round Intermedlate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Q: The Graber Corporation's common stock has a beta of 1.6. If the risk-free rate is 5.6% and the…
A: We are given with following details in the question: Beta of Stock = 1.6 Risk free rate = 5.6%…
Q: The Rhaegel Corporation's common stock has a beta of 1.1. If the risk-free rate is 4.2 percent and…
A: The cost of equity capital is the sum of risk-free rate plus beta. It is calculated as follows: Cost…
Q: Today, a firm has a stock price of $14.26 and an EPS of $1.15. Its close competitor has an EPS of…
A: The method of comparables is used to find the equity value of a company by equating its ratios to…
Q: our investment club has only two stocks in its portfolio. $15,000 is invested in a stock with a beta…
A: Portfolio Beta is the weighted average beta of individual stock Weight of stock 1 = 15000 /…
Q: BLC Industries is expected to pay a dividend of $1.50, and the dividend is expected to grow at a…
A: The conceptual formula used:
Q: The Angelina Corporation’s common stock has a beta of 1.6. If the risk-free rate is 4.7 percent and…
A: The provided information are: Beta = 1.6 Risk free rate = 4.7% Expected return = 13%
Q: Steady Company's stock has a beta of 0.17. If the risk-free rate is 6.1% and the market risk premium…
A: Stock beta (B) = 0.17 Risk free rate (RF) = 6.1% Market risk premium (MR) = 7.1%
Q: You have the following information about the returns for the securities of Super Lux plc and the…
A: The capital asset pricing model is the model which shows the relationship between the systematic…
Q: Diddy Corp. stock has a beta of 1.1, the current risk-free rate is 5 percent, and the expected…
A: The cost of equity can be calculated as per CAPM equation
Q: the company's common stock has a beta, β, of 1.2. The risk-free rate is 6%, and the market return is…
A: The capital asset pricing model will be applied in order to calculate the cost of equity associated…
Q: Kaiser Aluminum has a beta of 0.70. If the risk-free rate (RRF) is 5.0%, and the market risk premium…
A: Following details are given : Beta = 0.70 Risk free rate (RRF) = 5.0% Market risk premium (RPM) =…
Q: Hoolahan Corporation's common stock has a beta of 1.24. Assume the risk-free rate is 4.9 percent and…
A: Formula: Cost of equity = Risk free rate + (beta*(market rate - risk free rate))
Q: What is the company’s cost of common stock, rs?
A: Given information is: The common stock of Anthony Steel has a beta of 0.80. The risk-free rate is 5…
Q: The Swanson Corporation's common stock has a beta of 1.07. If the risk-free rate is 3.4 percent and…
A: Cost of equity here will be the required rate of return. We need to calculate cost of equity or…
Q: Your investment club has only two stocks in its portfolio. $20,000 is invested in a stock with a…
A: The beta of the stock refers to the risk factor which then gets multiplied by the market risk…
Q: Hoolahan Corporation's common stock has a beta of .87. Assume the risk-free rate is 3.6 percent and…
A: Risk free rate (Rf) = 3.6% Beta (B) = 0.87 Market return (Rm) = 11%
Q: Beale Manufacturing Company has a beta of 1.5, and Foley Industries has a beta of 0.30. The required…
A: Calculation of required return: = Risk free rate + Beta (Market rate - Risk free rate)
Q: The Rhaegel Corporation's common stock has a beta of 1.5. If the risk-free rate is 6 percent and the…
A: There are several methods for the calculation of cost of capital. All these methods are estimating…
Q: The Rhaegel Corporation's common stock has a beta of 1.8. If the risk-free rate is 4.9 percent and…
A: 1. COST OF EQUITY CAPITAL : = RISK FREE RATE + BETA X RISK PREMIUM 2. RISK PREMIUM : = EXPECTED…
Q: what is the expected return of the three stock portfolio described below? common stock market…
A: Calculate the stock portfolio as follows:
Q: The Angelina Corporation's common stock has a beta of 1.8. If the risk-free rate is 4.4 percent and…
A: Cost of equity = Risk free rate + (Expected market return - Risk free rate) * Beta
Q: Vild Swings, Inc.'s stock has a beta of 2.6. If the risk-free rate is 5.9% and the market risk…
A: The formula used is shown:
Q: Smathers Corp. stock has a beta of 1.24. The market risk premium is 6.90 percent and the risk-free…
A: Using CAPM
Q: The Graber Corporation's common stock has a beta of 1.6. If the risk-free rate is 4.7% and the…
A: Following details are given in the question for Graber Corporation: Beta = 1.6 Risk free rate = 4.7%…
Q: The Rhaegel Corporation's common stock has a beta of 1.8. If the risk-free rate is 4.9 percent and…
A: given, beta = 1.8 risk free rate ( rf )= 4.9% expected return of market ( rm )= 11%
Q: The standard deviation of stock returns of Park Corporation is60%. The standard deviation of the…
A: Given information: Standard deviation of Park Corporation is 60%, Standard deviation of market…
Q: the company's common stock has a beta, β, of 1.2. The risk-free rate is 6%, and the market return is…
A: Beta (β) = 1.2 Risk free rate (Rf) = 0.06 Market return (Rm) = 0.11 Cost of common equity (rs) = ?…
Q: The Nixon Corporation's common stock has a cost of capital of 12 percent. If the market risk premium…
A: The capital structure of a corporation is the combination of the sources of financing through which…
Q: teady Company's stock has a beta of 0.21. If the risk-free rate is 5.9% and the market risk…
A: Cost of Equity Capital: Cost of equity refers to the return that a firm or a company must give to…
Q: The Penny Corporation's common stock has a beta of 1.8. If the risk-free rate is 6.9% and the…
A: We require to calculate the Penny corporation's cost of equity capital in this question: As per…
Q: Joker stock has a sustainable growth rate of 6 percent, ROE of 11 percent, and dividends per share…
A: Sustainable growth rate is the maximum growth rate that a company can achieve without going for…
Q: Beale Manufacturing Company has a beta of 1.6, and Foley Industries has a beta of 0.55. The required…
A: The capital assets pricing model is a technique that helps to compute the required rate of return on…
Q: Financial analyst of Castle Investment Trust has gathered the following information on FRIVY Inc.…
A: Share price: Share price is the current market price of the share. It is the price of the share at…
Q: B24&Co stock has a beta of 1.66, the current risk-free rate is 3.16 percent, and the expected return…
A: Here, Risk Free Rate is 3.16% Beta is 1.66 Expected Return on the Market is 10.66%
Q: What is the value of a common stock if: a. the firm's earnings and dividends are growing annually…
A: We need to use constant growth model to calculate valuation stock. The equation Stock price(P0)…
Q: The Rhaegel Corporation's common stock has a beta of 1.1. If the risk-free rate is 4.5 percent and…
A: The cost of capital is calculated using CAPM. CAPM refers to the capital asset pricing model. It…
Q: FlavR Company stock has a beta of 2.14, the current risk-free rate is 2.14 percent, and the expected…
A: Beta = 2.14 Risk free rate = 2.14% Market return = 9.14%
Q: The common stock of Peeta Inc. has an expected return of 15.0%, the risk-free rate is 3.20%, and the…
A: Calculate the beta as follows:
Q: $
A: Portfolio Beta = Sum of [ Weight * beta ]
Q: The Rhaegel Corporation's common stock has a beta of 1.1. If the risk-free rate is 5.1 percent and…
A: In this we have to use capital assets pricing model to calculate the cost of equity.
Q: Diddy Corp. stock has a beta of 1.3, the current risk-free rate is 3 percent, and the expected…
A: The Capital Asset Pricing Model (CAPM) refers to the model which tells us how the financial markets…
Q: Diddy Corp. stock has a beta of 1.2, the current risk-free rate is 5 percent, and the expected…
A: Cost of equity = Risk free rate + beta(market return - risk free rate) Cost of equity = 5% +…
Q: The Fraber Corporation's common stock has a beta of 0.6. If the risk-free rate is 1.7% and the…
A: Given:Fraber corporations common stock:Beta=0.6Risk free rate=1.7%Expected return on the…
Q: Ice Company stock has a beta of 1.92, the current risk-free rate is 5.17 percent, and the expected…
A: Beta = 1.92 Risk free rate = 5.17% Market return = 15.17%
Q: Diddy Corp. stock has a beta of 1.3, the current risk-free rate is 7 percent, and the expected…
A: Given: Risk free rate = 7% Beta = 1.3 Market return = 12.50%
Q: The Rhaegel Corporation's common stock has a beta of 1.2.f the risk-free rate is 5 percent and the…
A: Cost of equity can be defined as the expected return demanded by the shareholders of a company. In…
Q: The Hudson Corporation’s common stock has a beta of 1.4. If the risk-free rate is 4.5 percent and…
A: Questions 1-2:Calculation of Cost of Equity Capital and WACC:The cost of equity capital is 13.60%…
Risk and return
Before understanding the concept of Risk and Return in Financial Management, understanding the two-concept Risk and return individually is necessary.
Capital Asset Pricing Model
Capital asset pricing model, also known as CAPM, shows the relationship between the expected return of the investment and the market at risk. This concept is basically used particularly in the case of stocks or shares. It is also used across finance for pricing assets that have higher risk identity and for evaluating the expected returns for the assets given the risk of those assets and also the cost of capital.
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- The Rhaegel Corporation's common stock has a beta of 11. If the risk-free rate is 4.2 percent and the expected return on the market is 12 percent, what is the company's cost of equity capital? (Do not round Intermedlate calculatlons and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity capital 13.79 %Hoolahan Corporation's common stock has a beta of 1.29. Assume the risk-free rate is 5.4 percent and the expected return on the market is 12.9 percent. What is the company's cost of equity capital? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Cost of equity %1. Calculating Cost of Equity The Nixon Corporation's common stock has a beta of .95. If the risk-free rate is 2.7 percent and the expected return on the market is 10 percent, what is the company's cost of equity capital?
- Using the equity asset valuation model (CAPM) equation, determine the required return for the shares of the following companies, if the market return is 7.50% (Rm = 7.50%) and the risk-free asset return is 1.25% (RF = 1.25%). You must show all counts. Stock Beta SKT 0.65 COST 0.90 SU 1.42 AMZN 1.57 V 0.94Storico Co. just paid a dividend of $2.00 per share. The company will increase its dividend by 20 percent next year and will then reduce its dividend growth rate by 5 percentage points per year until it reaches the industry average of 5 percent dividend growth, after which the company will keep a constant growth rate forever. If the stock price is $48.75, what required return must investors be demanding on the company's stock? (Hint: Set up the valuation formula with all the relevant cash flows, and use trial and error to find the unknown rate of return.) (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Required return % 4Estimating Cost of Equity Capital Assume that a company’s market beta equals 0.8, the risk-free rate is 5%, and the market return equals 8%. Compute the company’s cost of equity capital. Round answer to one decimal place (ex: 0.0245 = 2.5%) Answer%
- What is the company’s cost of capital? 1. CAPM = rrf + (rm – rrf)B = required rate of return on equityr rf = risk-free rate of return = 10-year Treasury rate = 3% S&P market premium (in parenthesis) is the extra return to cover risk offered in the stock market = 5%. B = Beta of company = 1.2 2. WACC = wdrd(1-t) + were = weighted average cost of capitalWeights of debt and equity: Given debt ratio, that is, debt to total assets = 28%. Cost of debt is bond rating at high end of A average = 6%. Tax rate given 40%.The cost of raising capital through retained earnings is (GREATER THAN / LESS THAN) the cost of raising capital through issuing new common stock. The current risk-free rate of return is 3.80% and the current market risk premium is 5.70%. Blue Hamster Manufacturing Inc. has a beta of 0.87. Using the Capital Asset Pricing Model (CAPM) approach, Blue Hamster’s cost of equity is (9.64 / 8.76 / 11.39 / 9.20) . 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 4.50%. Using the bond-yield-plus-risk-premium approach, the firm’s cost of equity is (14.70 / 16.17 / 17.64 / 18.38) . The stock of Cute Camel Woodcraft Company is currently selling for $32.45, and the firm expects its dividend to be $1.38 in one year. Analysts project the firm’s growth rate to be constant…Consider the following for a firm. Its stock price (P0) is at $50, its payout ratio (POR) is 0.4, its EPS1 is $2.00, and investor required return is 10%.. What is the percent of capital gains?DONOT SOLVE ON EXCEL USE PROPER FORMATE
- The cost of raising capital through retained earnings is the cost of raising capital through issuing new common stock. The cost of equity using the CAPM approach The current risk-free rate of return (rRFrRF) is 3.86% while the market risk premium is 6.17%. The Burris Company has a beta of 0.92. Using the capital asset pricing model (CAPM) approach, Burris's cost of equity is The cost of equity using the bond yield plus risk premium approach The Taylor Company is closely held and, therefore, cannot generate reliable inputs with which to use the CAPM method for estimating a company's cost of internal equity. Taylor's bonds yield 11.52%, and the firm's analysts estimate that the firm's risk premium on its stock over its bonds is 4.95%. Based on the bond-yield-plus-risk-premium approach, Taylor's cost of internal equity is: 16.47% 19.76% 18.12% 15.65% The cost of eguity usina the discOunted.cash flow for dividend.aroutb) approachSteeler Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You have been provided with the following data: risk-free rate (rRF) = 4.15%; market risk premium = 5.00%; and beta = 1.14. Based on the CAPM approach, what is the cost of equity from retained earnings? 9.85% 9.67% 10.60% 10.28% 10.93%The cost of raising capital through retained eamings is the cost of raising capital through issuing new common stock. The cost of equity using the CAPM approach The current risk-free rate of return (rRF) is 4.23 % , while the market risk premium is 6.63 %. the D'Amico Company has a beta of 0.78. Using the Capital Asset Pricing Model (CAPM) approach, D'Amico's cost of equity is The cost of equity using the bond yield plus risk premium approach The Hoover Company is closely held and, therefore, cannot generate reliable inputs with which to use the CAPM method for estimating a company's cost of internal equity. Hoover's bonds yield 11.52%, and the fim's analysts estimate that the firm's risk premium on its stock over its bonds is 3.55 %. Based on the bond-yield-plus-risk-premium approach, Hoover's cost of internal equity is: 18.08% 14.32% 15.07% 18.84% The cost of equity using the discounted cashflow (or dividend growth) approach Kirby Enterprises's stock is currently selling for $32.45…