The market value of Company A's common stock is $25 million, and the market value of its risk-free debt is $10 million. The beta of the company's common stock is 1.3, and the market expected return is 10 per cent. If the Treasury bill rate is 4 per cent, what is the company's cost of capital? (Assume no taxes.) O a. 9.6 per cent O b. 15.8 per cent c. None of these options O d. 11.8 per cent

Q: Why is it important to have an FMS option?

A: FMS "FLEXIBLE MANUFACTURING SYSTEMS" A collection of numerically controlled machine tools that are…

Q: What is par value?

A: Stockholders’ equity is the measure of assets staying in a business after the sum total of the…

Q: What does "FMS option" imply exactly?

A: The term "US government program" refers to any initiative, policy, or project implemented by the…

Q: What are the advantages and disadvantages of  FIFO?

A: First-in-First-Out:  In First-in-First-Out method, the costs of the initially purchased items are…

Q: What is the difference between a Put option and a Call option? Explain. Provide examples.

A: Option is a derivative instrument which gives a choice to its buyer to buy or sell the underlying…

Q: What is preemptive rights offering?

A: Preemptive rights:  A contractual clause that provides the shareholders with a right to purchase the…

Q: What is the going concern assumption?

A: Going concern Assumption: On the basis of Going concern assumption Financial statements are…

Q: what is the difference between a call option and a put option?

A: There are two types of options one is call option and other is put option and both are derivative…

Q: important to have an FMS option

A: FMS Stock Options refers to all outstanding options to buy stocks of FMS Common Stock bestowed under…

Q: What Does RiskReally Mean?

A: Risk: Risk can be defined as upcoming uncertainty about variation from anticipated earnings or…

Q: Why is the NPV preferred over the IRR?

A: Net Present Value is a method of finding the profitability of a project by discounting future cash…

Q: FMS option

A: Options are called financial derivatives that provide buyers with the right, but not the obligation,…

Q: what method is preferred method IRR or NPV and why

A: This is related to capital budgeting.Both NPV and IRR are tools of capital budgeting that we use to…

Q: What is the definition of "FMS option"?

A: Stock Option:A stock option (additionally referred to as a fairness option), offers an investor the…

Q: 4-25. Your parents make 25 equal annual deposits of $1,000 each into a bank account earning 4%…

A: Future value can be calculated using FV (rate, nper, pmt, [Pv], [type]) Rate The interest rate Nper…

Q: When is independence required?

A:

Q: What is a constraint?

A: Internal Control:   It refers to a set of rules, policies adopted by a business to ensure accuracy…

Q: What are the Differences in Maturities?

A: Maturities in the context of the bond mean that bonds are issued for a specific period of time. It…

Q: What assumptions are inherent in the EOQ model as presentedhere?

A: Economic order quantity (EOQ): Economic ordering quantity (EOQ) is the perfect order quantity a…

Q: Which alternative is considered to be riskier, all else equal? and why?

A: Debt and Equity mix or only equity are the forms of capital structure which is chosen by the entity…

Q: What is GAAP and why it is needed?

A: GAAP - Generally Accepted Accounting Principles

Q: What are the CVP assumptions?

A:

Q: Define the Make-or-Buy Decision?

A: A make or buy decision is to choose whether to manufacture the produce in-house or purchase it from…