Answer:
e. Missed loan payments, high balances on credit cards, and personal bankruptcy
Explanation:
If you look at each of these factors, they are all closely related to an individual's past credit history and their ability to pay their debts on time. If you miss your payments or declare bankruptcy, you obviously are not in a very good financial position. Owing too much money to your credit cards is not a good sign since credit cards charge a very high interest rate and they are usually our last option when we consider financing options.
False is the answer.
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Answer:
Using Capital Asset Pricing Model
Ke= Rf +β(Market risk-premium)
Ke = 2.97 + 0.91(7.40)
Ke = 9.9%
Using Dividend Growth Model
Ke = Do<u>(1 + g) </u> + g
Po
Ke = $3.69<u>(1 + 0.034)</u> + 0.034
$69.57
Ke = $3.69<u>(1.034)</u> + 0.034
$69.57
Ke = 0.0548 + 0.034
Ke = 0.089 = 9%
The best estimate of the company's cost of equity is 9.9%
Explanation:
Cost of equity is a function of risk-free rate plus the product of beta and market risk-premium according to capital asset pricing model.
Using dividend growth model, cost of equity is a function of current dividend paid, subject to growth rate, divided by current market price plus growth rate.
Answer: 25.30%
Explanation:
This can be calculated by the Capital Asset Pricing Model (CAPM):
= Risk free rate + Beta * (Market return - Risk free rate)
= 5% + 1.45 * (19% - 5%)
= 5% + 20.3
= 25.30%
