As an analyst, you were task to compute for the WACC of various companies given the following information. Income tax rate is 30%. Risk free rate Beta Market Debt to equity ratio Debt margin Accenture Co. 1.25 2.50 2% Nestle Co. 3% 1.5 3.00 3% Which company has the highest cost of equity? FedEx Co. 2% 1.3 10% 4.00 2.50% Cadence Co. 3.50% 1.4 8% 1.50%
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- Assume that you are a consultant to Thornton Inc., and you have been provided with the following data: risk 1.8. What is the cost of equity from free rate rRF = 5.5%; market risk premium RPM retained earnings based on the CAPM approach? = 6.0%; and b =Assume that you are a consultant to Morton Inc., and you have been provided with the following data: DO = $1.4; PO = $36; and g = 4.8% (constant). What is the cost of equity from retained earnings based on the DCF approach? O 9.68% O 9.08% O 9.48% O 9.28% O 8.88% 19As an Analyst you were tasked to compute for the Weighted Average Cost of Capital of variouscompanies given the following information. Income tax rate is 25% a. What is the cost of equity of each companies?b. What is the after tax cost of debt of each companies?c. What is the WACC of each companies? W Corp A Corp Co. Corp Ca Corp Risk Free rate 4.00% 3.00% 2.00% 3.50% Beta 1.25 % 1.50% 1.30% 1.40% Market Return 12.00% 11.00 % 10:00% 8:00% Debt to Equity Ratio 2.5 3 4 3.5 Credit Spread om BPS 200 300 250 150
- You have been hired by the CFO of Lugones Industries to help estimate its cost of common equity. You have obtained the following data: (1) rd = yield on the firm's bonds = 7.00% and the risk premium over its own debt cost = 4.00%. (2) rRF = 5.00%, RPM = 6.00%, and b = 1.25. (3) D1 = $1.20, P0 = $35.00, and g = 8.00% (constant). You were asked to estimate the cost of common based on the three most commonly used methods and then to indicate the difference between the highest and lowest of these estimates. What is that difference? 1.13% 1.50% 1.88% 2.34% 2.58%Example The following data were assembled for General Stores Corporation: Equity (Market Risk) Premium: 4.9% Size Premium: 1.8% Value Premium: 3.0% Current Risk-Free Rate: 3.5% Market Beta: 1.05 Size Beta: -0.315 Value Beta: -0.224 Using the data above, estimate General Stores' cost of equity using the Fama- French Model.As the assistant to the CFO of Johnstone Inc., you must estimate its cost of common equity. You have been provided with the following data: D0 = $0.80; P0 = $22.50; and g = 8.00% (constant). Based on the DCF approach, what is the cost of common from retained earnings? Please show formula and answer
- An equity analyst, has determined that the appropriate ratio of Enterprise Value to EBITDA (EV/EBITDA) for Bulldogs Inc. is 10.2. The analyst has also collected the following forecasted information for Bulldogs Inc.: EBITDA = ₽22,000,000 Market value of debt = ₽56,000,000 Cash = ₽1,500,000 The value of equity for Bulldogs Inc. is closest to: a. ₽224 million. b. ₽100 million. c. ₽169 million. d. ₽281 millionAdams Inc. has the following data: rRF = 5.00%; RPM = 6.00%; and b = 1.05. What is the firm's cost of common from reinvested earnings based on the CAPM? a. 12.72% O b. 11.99% c. 12.35% d. 11.64% e. 11.30%As a consultant to Basso Inc., you have been provided with the following data: D1 = $0.68; P0 = $28.50; and g = 7.00% (constant). What is the cost of common from retained earnings based on the DCF approach? Group of answer choices 10.14% 9.10% 9.48% 9.39% 8.64%
- Estimate its cost of common equity, Maxell and Associcates recently hired you. Obtain the following data, D0=$0.90, P0= $27.50, gl=7% constant. Based on the dividend grwoth model, What is the cost of common for reinvested earnings? (10.50%,9.29%,10.08%,9.68%,10.92%)Gates Appliances has a return-on-assets (investment) ratio of 20 percent. a. If the debt-to-total-assets ratio is 25 percent, what is the return on equity? (Input your answer as a percent rounded to 2 decima) places.) b. If the firm had no debt, what would the return-on-equity ratio be? (Input your answer as a percent rounded to 2 decimal places.)Calculate the cost of equity with the CAPM Calculate the cost od debt based on what the company is currently paying for its debt - Beta of the industry = 1.16 - Equity Risk Premium = 6.97% - Risk-free rate = 3.77% - Objective capital structure of the industry = 13.24%