University:
Boise State University
Course:
BUSMGT 315 | Foundations Of Management
Academic year:

2023
Views:

274

Pages:

2
Author:

forderveu0hk

1. Finding a firm's overall cost of equity is difficult because: 2. It cannot be observed directly 3. To estimate the dividend yield of a particular stock, we need: - the current stock price - forecasts of the dividend growth rate, g - the last dividend paid, D0 4. If an analyst's forecast for a firm's earnings growth is 7%, and its dividend yield is 3%, its cost of equity will be _____. 5. 10% 3%+7%=10% 6. A firm's capital structure consists of 30% debt and 70% equity. Its bond yield 10%, pretax, its cost of equity is 16%, and the tax rate is 40%. What is its WACC? 7. 13% (0.7 x 16%) + (0.3 x 10% x (1 - 0.4)) = 13% 8. If a firm uses its overall cost of capital to discount cash flows from projects in higher risk divisions, it will accept ____ projects. 9. too many 10. According to the CAPM, what is the expected return on a stock if its beta is equal to zero? 11. the risk-free rate 12. Some risk adjustment to a firm's WACC for projects of differing risk, even if it is subjective, is probably 13. better than no risk adjustment