Problem 14.02 – Calculating Cost of Equity
Fundamentals of Corporate Finance
Ross, Westerfield, and Jordan
13th Edition
Figure out the company’s cost of equity capital?
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Figure out the company’s cost of equity capital?
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Determine the total portfolio value on the ex-dividend date.
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Given the debt-to-capital ratio, projected earnings per share, and projected stock price… determine the debt-to-capital ratio where the company’s WACC is minimized.
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Figure out the best estimate of the cost of equity.
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Given a probability distribution table and EPS for three firms,… evaluate the relative riskiness of the three firm’s earnings.
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Determine the ex-dividend price given that the new IRS regulations require that taxes be withheld.
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Find the best estimate of the company’s cost of equity capital (Using the arithmetic average growth rate & geometric average growth rate).
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Given assets, debt, equity, and a tax rate… find the unlevered beta.
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Calculate how many new shares will be distributed after a stock dividend is declared, and determine how the common stock account, the capital surplus account, the retained earnings account and the total owners’ equity would change as a result of the stock dividend.
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Given the share capital of the company and the company’s books… find how many shares are issued, outstanding, and how many more shares can be issued.
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