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Juli2301 [7.4K]
3 years ago
9

The market capitalization of this company is $140 million, it's beta is 0.75, the risk free rate is 2% and the market risk premi

um is 6%. Use this (and the information from the previous questions to answer the following four questions). What is the cost of equity capital (in percentage so if the answer is 3.4%, enter 3.4)?
Business
1 answer:
tiny-mole [99]3 years ago
5 0

Answer:

Ans. The cost of equity capital is 6.5 (6.5%)

Explanation:

Hi, all we need to do is fill the following equation with the data from the problem.

r(e)=rf+beta*(MRP)

Where:

rf = Risk free rate (in our case, 2%)

MRP = market risk premium (in our case, 6%)

r(e) = Cost of equity capital

Therefore, this is what we get.

r(e)=0.02+0.75*0.06=0.065

So the cost of equity capital is 6.5% or 6.5 as the problem suggests to answer.

Best of luck.

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Answer:

These questions are incomplete since the article relating to Hologen company is not attached. However, I would answer them this way.

Explanation:

1) A floating rate bond has a shorter duration; almost zero and it has lower sensitivity to interest rates compared to a fixed rate bond.This means that the former has a lower interest rate risk. Investors tend to demand floating rate bonds when they expect future interest rates to rise because their prices would be close to their par values as their interest rates would also increase. On the other hand, fixed bond's interest rates are inversely related to their prices.

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For an issuing company, borrowing money floating rates terms could be riskier for cashflow management purposes . Every time interest rates increases, it means that the company would pay higher interests to lenders which could hurt its profitability. The fluctuations could also negatively affect future financial planning unlike issuing fixed rate bonds whose coupon payments are constant hence decreasing the volatility of earnings.

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4 years ago
Nathan manages a website that sells bicycles. He's using a Google Ads Display campaign to drive purchases in that segment, and c
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Complete Question:

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The advantage In-Market audiences gives Nathan in reaching his marketing goals is Connects him with audiences most interested in what he has to offer.

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He will accelerate sales in that category with the Google Advertising Show plan.

With specific segments which identify users based on their demonstrated consumer behaviour and purpose, you can connect with people who are most interested in what you can give.

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3 years ago
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4 years ago
Name three rules for creating an effective presentation to summarize a pi team's activities
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