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A company has a capital structure of 40% debt and 60% equity.

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1. A company has a capital structure of 40% debt and 60% equity. The YTM on the company?s bonds is 9%, and the company?s effective tax rate is 40%. The CFO has estimated the company?s WACC to be 9.96%. What is the company?s cost of equity? Show your work.;2. Your stock portfolio consists of only two stocks. You have $115,000 in Company A and $125,000 in Company B. Company A has an actual return of -8% and Company B has a return of 12%. What is the return on your portfolio? Show your work.;3. Company A has a beta of 2.77. Company B has a beta of.73. Company C has a beta of.90. The risk free rate is 6% and the market risk premium is 4%. What is the expected return of investing in Company A? Show your work.;Additional Requirements;Min Pages: 1;Level of Detail: Show all work

 

Paper#21803 | Written in 18-Jul-2015

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