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- Question 26 Consider the following data: D1-$1.55: Po-$49.50. g-3.70% (constant), and F-2.00%. What is the cost of equity raised by selling new common vock? O a. 9.90% Ob.6.90% O c. 10.90% O d. 8.90% O e. 8.83%octoring Enable x + getproctorio.com/secured #lockdown octoring Enabled: Chapter 4 Required Homework (G... i 03:48:29 5 The Home Depot is the largest home improvement retailer in the United States. Home Depot financial statements for 2024 are shown below (in thousands): 2024 Income Statement Net sales Cost of goods sold Gross profit Operating expenses Interest expense Income tax expense Net income Assets Cash $ 10,000 (6,550) 3,450 (2,350) (300) (320) $ 480 Comparative Balance Sheets Accounts receivable Inventory Property, plant, and equipment (net) Bonds payable Common stock Retained earnings Liabilities and Shareholders' Equity Current liabilities December 31 2024 Saved $ 700 700 900 3,000 $ 5,300 1,700 1,900 700 1,000 $ 5,300 2023 $ 600 500 700 3,100 $ 4,900 $ 1,450 1,900 700 850 $ 4,900 Help Required: Calculate Home Depot ratios for 2024. Note: Consider 365 days a year. Do not round intermediate calculations and round your final answers to 2 decimal places.Given Analysis of unlevered equity beta with risky debt beta = .30 Firm1 (F1) Firm2 (F2) Firm3 (F3) Company Name b. Solution Levered Equity Betas Analysis of Sterling Analysis based on simple average of unlevered equity betas beta unlevered D/E 1.79 1.98 1.71 0.20 Tax Rate Debt/Equity Assumed Capitalization Debt Betas 0.30 0.30 0.30 0.31 0.24 0.22 beta debt 38% 0.30 Average D/E 0.20 a. Solution: Unlevered Equity Betas beta levered
- …Question in photo And return on equity is: 17.46% according to m and m proposition A. 13.09% B. 17.46% C. 13.16% D. 15% E. 16.70%48 The Sunland Products Co. currently has debt with a market value of $300 million outstanding. The debt consists of 9 percent coupon bonds (semiannual coupon payments) which have a maturity of 15 years and are currently priced at $1,434.63 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $10 per share. The preferred shares pay an annual dividend of $1.20. Sunland also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 5 percent per year forever. If Sunland is subject to a 40 percent marginal tax rate, then what is the firm's weighted average cost of capital? Excel Template (Note: This template includes the problem statement as it appears in your textbook. The problem assigned to you here may have different values. When using this template, copy the problem statement from this screen…Solvency and Profitability Trend Analysis Addai Company has provided the following comparative information: 20Y8 20Υ7 20Υ6 20Y5 20Υ4 Net income $273,406 S367,976 $631,176 $884,000 $800,000 Interest expense 616,047 572,003 528,165 495,000 440,000 Income tax expense 31,749 53,560 106,720 160,000 200,000 Total assets (ending balance) 4,417,178 4,124,350 3,732,443 3,338,500 2,750,000 Total stockholders' equity (ending balance) 3,706,557 3,433,152 3,065,176 2,434,000 1,550,000 Average total assets 4,270,764 3,928,396 3,535,472 3,044,250 2,475,000 Average total stockholders' equity 3,569,855 3,249,164 2,749,588 1,992,000 1,150,000 You have been asked to evaluate the historical performance of the company over the last five years. Selected industry ratios have remained relatively steady at the following levels for the last five years: 20Y4-20Y8 Return on total assets 28% Return on stockholders' equity 18% Times interest earned 2.7 Ratio of liabilities to stockholders equity 0.4 Required: 1.…
- 13:19 M O - Fnan301FinalExamFall2...ba1995f96f6315dff9f7 5 ii) Capital gains yield iii) Total rate of return (yield) 4. Based on the following information Calculate State of Economy Probability of State of Economy Rate of Return if State Occurs Stock A Stock B Recession 0.20 0.05 -0.17 Normal 0.55 0.08 0.12 Вoom 0.25 0.13 0.29 a) The expected return of Stock A (7.5 points) b) The expected return of Stock B (7.5 points) c) The expected return of Portfolio where you invest $35,000 in Stock A and $45,000 in Stock B (5 points) d) Suppose Stock A has a beta of 0.8 and Stock B has a beta of 1.3. If you invest $35,000 in Stock A and $45,000 in Stock B, what is the beta of this portfolio? (5 points) e) Expected return on the market (RM) is 10% and the risk-free (rr) is 4%. What must the the expected return on the portfolio according to CAPM? (Use the beta you have calculated in section d) for CAPM) (5 points) ||What is the estimated cost of common equity using the DCF approach given the data below? Price $50 Current dividend $4.19 Constant growth rate 5%A B с E F Investment Opportunity set for stocks and bonds with varios correlation coeffients SD s SDB 19 8 E(rs) 10 Weight in stocks WS -0.1 0.0 0.1 0.2 0.3 0.4 0.6 0.8 1.0 1.1 D E(TB) 5 Portfolio expected return ws(min) = (GB^2 - OBOSP) / (Os^2 + B^2 - 2*0BÚSP) E(rp) = ws(min) *E(rs)+(1-wg(min))*E(rb) = SDp = G -1 Portfolio Standard Deviation for Given Correlation 0 0.2 0.5 H Minimum Variance Portfolio 1
- 1 2 Debt Ratio (current) 3 Equity Ratio (current) 4 Cost of Debt 5 Market Risk Premium 6 Equity Beta 7 Debt Beta 8 Risk Free Rate 9 Corporate Tax Rate 10 11 12 a. Cost of Equity 13 b. WACC 14 c. 15 Unlvered beta 16 Debt to Equity Ratio 17 Debt to Equity Beta 18 Cost of Equity 19 Debt to Ratio Given 20 Equity Ratio 21 Revised WACC 22 Solution 30.00% 70.00% 6.00% 5.25% 1.20% 0.29 4.50% 35.00% 40%4. What is the total present value of equity as of the beginning of 2021 using the implied value to book ratio multiple? 5. What is the estimated value per share using the implied value to book ratio?Covariance with Mean Return Stock AOL Microsoft Intel AOL .002 .001 15% Microsoft .001 .002 .001 12 Intel 001 .002 10 5.2. Compute the tangency portfolio weights assuming a risk-free asset yields 5 percent.