A share has a beta of 0.75, the risk-free rate of interest is 6.5% and the...
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A share has a beta of 0.75, the risk-free rate of interest is 6.5% and the expected market return is 18%, according to the CAPM: a. What is the market-determined required return on the share? b. The share is expected to pay a dividend of $2.50 in 12 months' time and has an expected selling price at that time of $36.00. If the share is currently trading in the stock exchange at $34.00, is it overvalued or undervalued, according to the CAPM? Alibaba Brothers Ltd has the following capital structure and their costs: Equity S$360 mil (market value); Cost = 12% = = 8% Debt S$240 mil (market value); Cost Calculate the company's weighted average cost of capital. A share has a beta of 0.75, the risk-free rate of interest is 6.5% and the expected market return is 18%, according to the CAPM: a. What is the market-determined required return on the share? b. The share is expected to pay a dividend of $2.50 in 12 months' time and has an expected selling price at that time of $36.00. If the share is currently trading in the stock exchange at $34.00, is it overvalued or undervalued, according to the CAPM? Alibaba Brothers Ltd has the following capital structure and their costs: Equity S$360 mil (market value); Cost = 12% = = 8% Debt S$240 mil (market value); Cost Calculate the company's weighted average cost of capital.
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a Using the CAPM formula the marketdetermined required return on the share can be calculated as Requ... View the full answer
Related Book For
Financial Reporting Financial Statement Analysis and Valuation a strategic perspective
ISBN: 978-1337614689
9th edition
Authors: James M. Wahlen, Stephen P. Baginski, Mark Bradshaw
Posted Date:
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