- This topic has 10 replies, 7 voices, and was last updated 12 years ago by
.
- Posts
HI
Can someone give a good asset beta question to try as not come across many examples of these and i see its mentioned on the recommendations list for Dec 2011?
- Topics: 0
- Replies: 52
- ☆☆
H plc is a hot air balloon manufacturer whose equity: debt ratio is 5:2. The corporate debt, which is assumed to be risk free, yields 11% before tax. The beta value of the company’s equity is 1.1. The average return on the stock market is 16%. The corporation tax rate is 31%.
The company is considering a waterbed-manufacturing project. S plc is a waterbed- manufacturing company. It has an equity beta of 1.59 and a E:D ratio of 2:1. H plc maintains its existing capital structure after the implementation of the new project.
What would be a suitable cost of capital to apply to the project?
Hi, is the answer to this 18.6%
Also, what does it mean that the beta value of the company’s equity is 1.1?
Is it used in the calculation?Ungear the proxy to get an asset beta of 1.1777
Regear the original to get a beta of 1.507
Fit this into the CAPM formula to get 20.81%?????- Topics: 0
- Replies: 1
- ☆
Ke = 18.42%
- Topics: 0
- Replies: 5
- ☆
yes this is the answer
- Topics: 0
- Replies: 5
- ☆
yes this is the answer
- Topics: 0
- Replies: 5
- ☆
yes this is the answer
- Topics: 0
- Replies: 5
- ☆
yes this is the answer
- Topics: 0
- Replies: 5
- ☆
can any please help me what is the meaning of with recouse and without recourse in the factoring problem in simple wards.
If factoring is without recourse (or non-recourse) it means that the company will not have any bad debts – the factor guarantees full payment to the company and it is the factor who suffers any bad debts.
If it is with recourse, then the company does suffer any bad debts and only gets the cash that is actually collected.
- You must be logged in to reply to this topic.