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DOM company has current capital structure of 30% debt 70% equity. Current before tax cost of debt is 10% and its tax rate is 45% . Currently has a levered beta of 1.25. The risk free rate is 3.5% an
(a) Determine the expected return on your portfolio. (b) Determine the portfolio beta. (c) Given the portfolio beta and the assumptions that the risk-free rate (rRF) is 7 percent and the expected re
How would a more controlled access to credit by firms and individuals have reduced the over leveraging of businesses and individuals and decreased the likelihood of the recent economic downturn?
An investment fund is considering two long term investments. Which is the best investment assuming equal risks and a 10 year investment?
That to estimate WACC for a levered private company, it is necessary to calculate the company’s levered B. This requires an estimate of the firm’s unlevered B, which can be obtained by d
A firm has an expected dividend next year of $1.20 per share, a 4 percent growth rate of dividends, and a required return of 10 percent. The value of a share of the firm's common stock is:
Q1. What is the expected value for each project? What does this value represent? Q2. What is the coefficient of variation for each project? What information does this measure provide to you and to the
a) Compute D0, D1, D2, D3 and D7. b) Compute the present value of the dividends for t = 3 years. c) Compute the current market price.
The following questions need to be answered: (1) Mr. and Mrs. A recently bought a house, the very first one they viewed.
Q1. What are the betas for Stocks X and Y? Q2. What are the required rates of return on Stocks X and Y? Q3. What is the required rate of return on a portfolio consisting of 60% of Stock X and 40% of S
Looking for 4-5 paragraphs with references to explain, "why investors demand higher expected rates of return on stocks with more variable rates of return."
Do you believe that consumers on the whole receive more benefit than risk from marketers knowing their personal information? Why or why not?
Have major corporations been unwilling to adapt to the times and meet competition head on? Are corporate executives better described as risk-averse managers than entrepreneurs willing to take a chan
If one company advertises and the other does not, the company that advertises earns $54 billion and the company that does not advertise loses $3 billion. For what range of interest rates could these
You are given the following information: Firm's cost of capital: 10% Each project will require three years of investment before revenues are generated.
Q1. Calculate the premerger Herfindahl-Hirschman index (HHI) for this market. Q2. Suppose that any two of these firms merge. What is the postmerger HHI?
Using Indifference Curve and Budget Line analysis, graphically demonstrate the equilibrium of a consumer who is maximizing utility. Briefly explain.
Answer the following in relation to COST: What is the expected value of each of these risks? What is the bet case total cost (only good things happen)? What is the worst case total cost (only bad th
Would government be better off taxing gasoline or Nike tennis shoes? Use the concept of elasticity (or inelasticity) of demand to defend your choice Define the following: a. Consumer surplus b. Prod
(a) A monopolist uses price discrimination to increase their profits. Where does this profit come from? Use a graph to explain your answer. (b) How is monopolistically competitive firm different from
Q1. Construct a game matrix for this scenario. Q2. Is there a Nash Equilibrium for this game? Why or why not.
Problem: You are considering entering a market serviced by a monopolist. You currently earn $0 economic profits, while the monopolist earns $5. If you enter the market and the monopolist engages in
Q1. Find the Nash equilibrium for a one-shot version of this game. Q2. Now suppose the game is infinitely repeated. If the interest rate is 10 percent, can you do better than you could in a one-shot
Q1. Does Mitchell have a dominant strategy? Explain. Q2. Does Wright have a dominant strategy? Explain.
1) If the players play only once, what strategy do you expect the players to adopt? 2) If the players expect to play in many games together, what strategy do you expect the players to adopt? Explain.