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Which of the following could explain why a business might choose to organize as a corporation rather than as a sole proprietorship or a partnership?
From the perspective of the subsidiary, what if the subsidiary provided the funds?
If the firms bonds earn a return of 12%, what will rs be using the bond yield-plus-risk-premium approach?
What options are available to organizations for raising capital? How do different capital markets affect the cost of capital to an organization?
Problem 1) Would you ever use CAPM to make personal investment decisions?
How would the cost of capital change if the capital structure changed.
Calculate the weighted average cost of capital (wacc) given the above capital structure.
What are the implications for raising equity capital for IBM based on this beta?
Problem 1: Estimate the cost of equity, WACC, and unlevered cost of equity. Problem 2: Using Target as the company you have been studying thus far.
What are the steps in calculating the Asset beta in the CAPM for purposes of calculating the cost of capital for a project?
Q1. Determine the required rate of return using the CAPM Q2. Using the constant growth dividend valuation model along with the finding in part A.
Do you feel that the Dividend Growth Model or the Capital Asset pricing Model is more accurate in determine the cost of a firm's common equity?
Typically when valuing an asset, adjustments for risk are made by adjusting:
Different companies choose different financial structures (debt vs. equity). Is there a preferred model? What are the positives/negatives of a higher % of each?
The correlation between the emerging market index return and the S&P 500 is 0.1.
What changes, if any, would you recommend in your selected organization's approach towards determining its cost of capital?
Using the constant growth DDM and the CAPM, the beta of the stock is
Conduct a sensitivity analysis, based on the following "what if" scenarios: 1) What if funds are blocked? How does this affect the parent company?
The CAPM (Capital Asset Pricing Model) would be an accurate way to estimate the cost of equity for a company like Federal Express.
If the market required rate of return is 14 percent and the risk-free rate is 6%, what is the funds required return?
What is the cost of equity of a firm that has a beta of 1.98 and a dividend yield of 6.58%?
Assume the capital - asset pricing model holds. What is the expected return on stock B?
Using the one-factor CAPM, work out the expected rate of return for the company for the seven-month period beginning Monday 27 may 2007 through to 31 Dec 2007.
1) Which project would you choose if the opportunity cost of capital is 2 percent? 2) Which would you choose if the opportunity cost of capital is 12 percent?
The expected return for the market (portfolio) is 14% and the risk-free rate is 5%. 1) Using the Capital Asset Pricing Model, what is the stock's value?