Assume a firm is financed with 30% debt on which it pays 9%. What is the expected return on equity if the expected return on assets is 14%? A. 16.14% B. 17.96% C. 14.92% D. 15.50%
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- If a bank has a leverage ratio of 0.5 and a return on assets of 1%, what is its return on equity? Select one: OA 0.2% O B. 2% OC 5% O D. 20%Using Capital Asset Pricing Method (CAPM), compute for the cost of capital (equity) with risk-free rate of 4%, market return of 8% and Beta of 1.75 a. 13.00% b. 12.00% c. 11.00% d. 10.00%The assets of company X have a beta equal to 1. Assume that the company's debt has a beta equal to 0.5 and that X's equity has a beta equal to 2. Consider an investor who holds 10% of the company's total debt liabilities and 10% of the company's equity. The beta of the investor's portfolio is equal to A) 0.1 B)1 C) 0.25 D) 1.25
- The asset of company X have a beta equal to 1. Assume that company’s debt has a beta to 0.5 and that X’s equity has a Beta equal to 2, consider an investor who holds 10% of company’s debt and 10% of the company’s equity, the beta of the investor’s portfolio is equal to? A. 0.25 B. 1 C. 1.25 D. 0.1Assume a firm is financed with $1000 debt that has a market beta of 0.4 and $3000 equity. The risk -free rate is 3%, the equity premium is 6%, and the firmʹs overall cost of capital is 11%. What is the expected return on the firmʹs debt? Group of answer choices 5.4% 4.5% 6.0% 3.0%Given the following calculate the Cost of Equity. Beta Equity Risk Premium Pre-tax Yield on Debt Return on the Bond Market Return on the Stock Market Risk Free Rate Tax Weight of Debt in the Total Capital Structure Weight of Equity in the Total Capital Structure 1.5 5.5% 6.0% 4.5% 8.0% 2.5% 25.0% 25.0% 75.0%
- Aneka Inc. hire your consulting firm to help them estimate the cost of equity. Yield of Aneka Inc. bonds is 7.25%, and the economist company in your company believes that the cost equity can be estimated using a risk premium of 3.50% over the company's cost of debt. What is Lange's estimated cost of equity from retained earnings? a. 10.75% b. 11.18% c. 11.63% d. 12.09% e. 12.58%what is the cost of Equity of KDP? Beta: 68 market risk premium:5.08% 3 month treasury yield: 5.34 % 10 year treasury yield: 4.27%M12-15. Estimating Cost of Equity Capital Assume that a company’s market beta equals 0.6, the risk-free rate is 5%, and the market return equals 13%. Compute the company’s cost of equity capital. Round answer to one decimal place (ex: 0.0245 = 2.5%) Answer%
- 11. With risk-free rate of 5%, Beta of 1.5, market return of 8%, prevailing credit spread of 3%, tax rate of 30% and Equity ratio of 30%, compute for the weighted average cost of capital. a. 6.00% b. 6.77% c. 7.00% d. 7.77%Which of the following is the better option for an average firm? A. A debt ratio = 30% and a timed interest earned 15. B. A debt ratio = 80% and a timed interest earned = 8. C. A debt ratio 60% and a timed interest earned = 2. D. A debt ratio = 10% and a timed interest earned = 7. - =Suppose TRF = 5%, M = 12%, and b; = 0.75, what is the cost of equity? 5.00% 10.25% 12.00% 6.00%