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Its cost of equity estimate is 13.5 percent and its cost of tax-exempt debt estimate is 7 percent. What is the hospital's corporate cost of capital?
What impact would the new capital structure have on the firm's net income, total dollar return to investors, and ROE?
For any given firm, can the corporate cost of capital be used as the hurdle rate for all projects under consideration? Explain your answer.
What are the three methods commonly used to estimate the cost of equity? How would you estimate the cost of equity for a small investor owned business?
Discuss some factors that health services managers must consider when setting a firm's target capital structure.
What is the primary difference between the corporate costs of capital for investor-owned and not-for-profit firms?
Why does this mean that debt financing generally is less costly for not-for-profit businesses?
What are some of the factors that managers must consider when setting the target capital structure?
What unique problems do managers of not-for-profit businesses face regarding capital structure decisions?
What is the impact of flotation costs on the cost of debt? Are these costs generally material?
Suppose the riskiness of the stock decreases, which causes the required rate of return to fall to 13 percent. Under these conditions, what is the stock's value?
If the firm's last dividend (D0) was $2.00, and the investors' required rate of return is 15 percent, what will be the company's stock price in three years?
If the stockholders' required rate of return is 15 percent, what is the expected dividend yield and expected capital gains yield for the coming year?
The required return on this stock is 20 percent. From a strict valuation standpoint, should Jane buy the stock?
If investors require a 12 percent rate of return on investments of similar risk, determine the value of the company's stock.
What is the expected dollar dividend over the next three years? What is the expected dividend yield and capital gains yield for each of the next three years?
If MCA's dividends are expected to grow at a constant rate in the future, what is the firm's expected stock price in five years?
A person is considering buying the stock of two home health companies that are similar in all respects. What are the intrinsic values of Stocks D and G?
What is meant by the term risk/return trade-off? Does this trade-off hold in all markets?
What is the Efficient Markets Hypothesis (EMH)? What are its implications for investors and managers?
Two investors are evaluating the stock of Beverly Enterprises for possible purchase. Which of the two investors would be willing to pay more for the stock?
What are the similarities and differences between equity capital in investor-owned firms and fund capital in not-for-profit firms?
What are the differences between Tenet Healthcare selling shares in the primary market versus its shares being sold in the secondary market?
Regal Health Plans issued a ten-year, 12 percent annual coupon bond a few years ago. Analyze what is the bond's yield to maturity?
What is the realized rate of return for those investors who bought the bonds for $1,000 when they were issued?