You are examining Retail ETFs (exchange traded funds) and have compiled the following information on three...
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You are examining Retail ETFs (exchange traded funds) and have compiled the following information on three of the ETFs. All Retail EV /Sales After-tax operating margin (next year) Sales/Capital Ratio Expected growth rate in operating income Life Cycle ETF 0.90 6.00% 2.00 3.00% Mature Luxury Retail ETF 2.25 16.00% 1.25 3.00% Mature Online Retail ETF 7.50 ΝΑ 6.00 ΝΑ High Growth a. If you assume that the All Retail ETF is priced fairly, estimate the cost of capital for a typical retail firm. (2 points) b. Now assume that you believe that luxury retailers have a 10% cost of capital. How under or over valued is the luxury retail ETF? (2 points) You are examining Retail ETFs (exchange traded funds) and have compiled the following information on three of the ETFs. All Retail EV /Sales After-tax operating margin (next year) Sales/Capital Ratio Expected growth rate in operating income Life Cycle ETF 0.90 6.00% 2.00 3.00% Mature Luxury Retail ETF 2.25 16.00% 1.25 3.00% Mature Online Retail ETF 7.50 ΝΑ 6.00 ΝΑ High Growth a. If you assume that the All Retail ETF is priced fairly, estimate the cost of capital for a typical retail firm. (2 points) b. Now assume that you believe that luxury retailers have a 10% cost of capital. How under or over valued is the luxury retail ETF? (2 points)
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a If you assume that the All Retail ETF is priced fairly the cost of capital for a t... View the full answer
Related Book For
The Essentials Of Statistics A Tool For Social Research
ISBN: 9781111829568
3rd Edition
Authors: Joseph F. Healey
Posted Date:
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