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photoshop1234 [79]
3 years ago
12

Stock in Daenerys Industries has a beta of 1.2. The market risk premium is 6 percent, and T-bills are currently yielding 4.9 per

cent. The company’s most recent dividend was $1.30 per share, and dividends are expected to grow at an annual rate of 8 percent indefinitely. If the stock sells for $36 per share, what is your best estimate of the company’s cost of equity?
Business
1 answer:
kobusy [5.1K]3 years ago
6 0

Answer:

The best estimate of the company’s cost of equity is 12%

Explanation:

Estimate of the company’s cost of equity = (Required Return as per Capital Asset Pricing Model + Cost of Equity) / 2

Required Return as per Capital Asset Pricing Model = Risk Free rate + Market Risk Premium * Beta

= 4.9 % + ( 6% * 1.2)

= 0.049 + 0.06 * 1.2

= 0.049 + 0.072

= 0.1210

= 12.10%

Cost of Equity = (Expected Dividend/Price) + Growth Rate

= [( $ 1.30 * 1.08) / $ 36] + 8%

= 0.039 + 0.08

= 0.1190

= 11.90%

The best estimate of the company’s cost of equity = (12.10 % + 11.90 % )/ 2

=  24% / 2

= 12%

Hence, the best estimate of the company’s cost of equity is 12%

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XYZ Company produces a significant daily amount of electronic waste. The company disposes the waste into the ocean despite stric
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Answer:

Legal responsibility

Explanation:

Since there have been regulations put in place by the government, it is thereforre a legally binding agreement between XYZ company and any other companies that does same as XYZ company.

The failure of XYZ company to honour the set regulations is a breach in its legal responsibilty alongside its corporate social responsibilty as well and it can be taken up by the government by either charging the XYZ company to court or revoking their operating license.

Cheers.

6 0
3 years ago
In 2011 oil production in Libya was interrupted by political unrest. At the same time, the demand for oil by China continued to
kondaur [170]

Answer:

As a result of the political unrest in Libya, the supply of oil would fall, As a result the supply curve would shift to the left. This would lead to fall in equilibrium quantity and a rise in price.

The increased demand for oil would shift the demand curve to the right. The equilibrium price and quantity would increase

Taking these two effects together, equilibrium price would rise and there would be an indeterminate effect on equilibrium quantity

Please check the attached image for a graph showing these shifts

b. As a result of the change in supply, supply would increase. This would increase equilibrium quantity and equilibrium price would fall. in addition with the increase in demand for oil, equilibrium quantity would rise and there would be an indeterminate effect on equilibrium quantity

Explanation:

7 0
3 years ago
Diego transfers real estate with an adjusted basis of $648,400 and fair market value of $907,760 to a newly formed corporation i
Monica [59]

Answer:

123,196

Explanation:

Recognized gain

= Liability on transferred real estate - Adjusted basis

= 771,596 - 648,400

= 123,196

Basis = 0

3 0
3 years ago
True or False: With the export subsidy, domestic producers will sell steel to domestic consumers and sell the rest abroad.
Bess [88]

The answer to the question of whether the export subsidy would make domestic producers sell steel to domestic consumers and sell the rest abroad is:

  • False because the domestic producers would not want to sell at a lesser price than what they would have sold abroad.

<h3>What is Export Subsidy?</h3>

This refers to the government policy which is meant to discourage export of goods with the aim of regulating the economy which usually leads to the increase in the amount of customer surplus in the market.

With this in mind, we can see that the export subsidy has to do with the increase in domestic price whereby there is a higher cost for exports for producers.

Read more about export subsidy here:
brainly.com/question/7193712

4 0
2 years ago
The customer has decided to purchase a home instead of renting. The price of the home is $750,000 and the customer intends to pu
Natasha2012 [34]

Answer:

A. growth stocks and blue chip stocks immediately in the amount of $150,000 to obtain the necessary cash down payment

Explanation:

The customer wouldn't want to get the stock cashed out now, so he doesn't have to worry about the stock or market having a huge decline and so, he can't buy the house.

5 0
2 years ago
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