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miv72 [106K]
4 years ago
10

Ganado and Equity Risk Premiums. Maria​ Gonzalez, Ganado's Chief Financial​ Officer, estimates the​ risk-free rate to be 3.50 %​

, the​ company's credit risk premium is 3.60​%, the domestic beta is estimated at 1.12​, the international beta is estimated at 0.86​, and the​ company's capital structure is now 80​% debt. The​ before-tax cost of debt estimated by observing the current yield on​ Ganado's outstanding bonds combined with bank debt is 7.60​% and the​ company's effective tax rate is 39​%. Calculate both the CAPM and ICAPM weighted average costs of capital for the following equity risk premium estimates. a. 8.10​% b. 7.10​% c. 4.90​% d. 3.90​%
Business
1 answer:
Elza [17]4 years ago
7 0

Answer:

WACC (CAPM) 5.2%

WACC (ICAPM) 5.03%

Explanation:

The weighted average cost of capital is

Ke * E/ E+D + Kd * (1 -t) D / E+D

Ke = Rf + (Rm - Rf) * \beta

Ke (CAPM) = 3.50% + (8% - 3.50%) * 1.12

Ke (CAPM) = 7.532%

Kd (CAPM) = Kd (1-t)

Kd (CAPM) = 7.60 (1-39%)

Kd (CAPM) = 4.636%

WACC (ICAPM) : 7.532 * 20% + 4.636 * 80%

WACC (CAPM) = 5.2164%

Ke (ICAPM) = 3.50% + (8% - 3.50%) * 0.86

Ke (ICAPM) = 6.596%

Kd (ICAPM) = Kd (1-t)

Kd (ICAPM) = 7.60 (1-39%)

Kd (ICAPM) = 4.636%

WACC (ICAPM) : 6.596 * 20% + 4.636 * 80%

WACC (CAPM) = 5.03%

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One should not include links to other social media platforms on a profile page on twitter.​
scoray [572]
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4 0
3 years ago
Ralph Goldsmith works for Zenith Inc., a leading cosmetic company based in Illinois. At Zenith, Ralph's primary responsibility r
Gelneren [198K]

Answer:

e. Customer Relationship Management

Explanation:

Customer Relationship Management -

It refers to the method which helps to get the required information from the potential and current customers, about the products of the company , is referred to as the customer relationship management .

They require the use of some previous data like the feedback forms, various communication channels like email , chats , website and social media.

It helps to get the correct and unbiased opinion of the customers, which helps in the betterment of the goods and services of the company , and the liking and disliking of the customers is considered while designing the product, which will help to increase the sale of the company.

Hence, from the given question,

The correct answer is Customer Relationship Management .

4 0
3 years ago
On January 1, 2020, Crane Corporation issued $660,000, 6%, 10-year bonds at face value. Interest is payable annually on January
notsponge [240]

Answer:

Dr cash   $660,000

Cr bonds payable       $660,000

Dr interest expense     $ 39,600.00  

Cr interest payable                           $39,600.00  

Explanation:

The issue of the bonds at face value implies that cash proceeds equal the face value of $660,000 which is then debited to cash account and credited to bonds payable.

The interest due on the bonds on 31st December payable on 1st January 2021 =face value*coupon rate

face value is $660,000

coupon rate is 6%

interest=$660,000*6%=$39,600.00  

5 0
4 years ago
One local hospital has just enough space and funds currently available to start either a cancer or heart research lab. If admini
morpeh [17]

Answer:

total payoff  =  $50000

Explanation:

solution

The payment is indicated on a specific node in a circular format.

This is the sum of the results and their possibilities.

we get  here now total payoff node is

total payoff  = 0.5 × $100,000 + 0.5 × 0

total payoff  =  $50000

and given the number, it shows that the right decision is the cancer lab. This is because it has the highest price with expected 60000  

 

8 0
4 years ago
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