Problem 12.09 – Caddie Manufacturing
Essentials of Corporate Finance
Ross, Westerfield, and Jordan
10th Edition
Find the company’s WACC.
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Find the company’s WACC.
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Given the stock beta, stock selling amount, year-end dividend, T-bill rate, and market risk premium… calculate the stock price at the end of the year.
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Given the stock beta, stock selling amount, year-end dividend, T-bill rate, and market risk premium and what investors believe the stock will sell for…. find out if its a good or bad buy, if the investors will invest, and what price the stock will be at equilibrium.
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Given the table with the company and betas, risk-free rate of interest, and risk premium… find each company’s expected rate of return using CAPM.
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Given the number of bonds, when they were issued, the years to maturity, the old and new yield to maturity, and the market value of equity… find the weight for debt.
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Given the debt-equity ratio, cost of equity, aftertax cost of debt, and risk adjustment factor… find the WACC and required return.
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Calculate the expected rate of return and market risk premium given the beta and expected return of Stock A and B.
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Given the expected rate of return on the market portfolio and the T-bill, find the beta of the stock.
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Find the cost of equity with the DCF and SML method.
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Given the treasury bill rate, market risk premium, and the beta and internal rate of return… figure out the project costs of capital and which capital investments have positive NPVs.
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