Answer:
13.05%
Explanation:
Using CAPM Equation, Ke = Rf+Beta*(Rm-Rf)
= 0.045+1.3*(0.07)
= 0.136
= 13.60%
Using Dividend growth model, Ke = (D1/P0) + g
= (D0*(1+g)/P0) = g
= (1.50*(1+0.08)/36) + 0.08
= 0.125
= 12.50
The cost of equity (Ke) = 0.136 + 0.125 / 2
The cost of equity (Ke) = 0.261/2
The cost of equity (Ke) = 0.1305
The cost of equity (Ke) = 13.05%
Answer: $78.25
Explanation:
The Southern Division is willing to pay $78.25 to an outside company for this part that it needs.
In the same vein, the maximum therefore that they would be willing to pay for the Western Division should be $78.25 as well because anything higher than that would constitute an Opportunity Cost loss.
They should go for the cheaper option and if buying from the Western Division exceeds the $78.25 then it is loss on their part. Western Division should charge the same or less.
Answer:
a. A Ba1 corporate bond <u>2 (not investment grade)</u>
b. A ten-year BBB- corporate bond with a YTM of 7% <u>3 (medium risk but still investment grade)</u>
c. A secured loan from Argosy Gaming, which is a B- rated firm <u>4 (less risky since it is backed by a collateral)</u>
d. A senior subordinated bond from Argosy Gaming <u>1 (highest risk)</u>
Explanation:
There are two major bond rating agencies in the US: Moody's and Standard & Poor's.
Their rankings are very similar, although the letters vary a little:
AAA: safest
AA: low risk
A: low risk
BBB: medium risk
BB: a little bit more riskier
B: risky
CCC: very high risk
CC: even riskier
C: riskiest
D: junk, in default
Don't know what you're trying to say but all that popped in my head was tax
Answer:
The correct answer is option d. to increase the shares outstanding.
Explanation:
A company can repurchase its previously purchased stocks to resell to the employees, for bonuses to employees and to even support the market price of the stock.
But the company certainly will not repurchase its previously purchased stocks to increase the shares outstanding.
I hope the answer is helpful.
Thanks for asking.
