Question: 38. Currently, Bloom Flowers Inc. has a capital structure consisting of 20% debt and 80% equity. Blooms debt currently has an 6% yield to maturity.

38. Currently, Bloom Flowers Inc. has a capital structure consisting of 20% debt and 80% equity. Blooms debt currently has an 6% yield to maturity. The risk-free rate (rRF) is 3.9%, and the market risk premium (rM rRF) is 7.1%. Using the CAPM, Bloom estimates that its cost of equity is currently 12.7%. The company has a 40% tax rate. What is the current beta on Blooms common stock? Carry out calculations with complete accuracy and report answers to four decimal places.

Step by Step Solution

There are 3 Steps involved in it

1 Expert Approved Answer

Step: 1 Unlock blur-text-image

Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock

Step: 3 Unlock

Students Have Also Explored These Related Finance Questions!

From the left panel of Figure 4.4, derive Nation 2s supply curve of exports of commodity Y. From the left panel of Figure 4.3, derive Nation 1s demand curve for Nation 2s exports of commodity Y. Use...

Problem 14-11 Recapitalization Currently, Bloom Flowers Inc. has a capital structure consisting of 20% debt and 80% equity. Bloom's debt currently has an 8% yield to maturity. The risk-free rate...

Currently, Bloom Flowers Inc. has a capital structure consisting of 20% debt and 80% equity. Blooms debt currently has an 8% yield to maturity. The risk-free rate (r RF ) is 5%, and the market risk...

Problem 13-11 Recapitalization Currently, Bloom Flowers Inc. has a capital structure consisting of 20% debt and 80% equity. Bloom's debt currently has an 9% yield to maturity. The risk-free rate...

Currently, Bloom Flowers Inc. has a capital structure consisting of 20% debt and 80% equity. Blooms debt currently has an 8% yield to maturity. The risk-free rate (rRF) is 5%, and the market risk...

RECAPITALIZATION Currently, Bloom Flowers Inc. has a capital structure consisting of 20% debt and 80% equity. Blooms debt currently has an 8% yield to maturity. The risk-free rate (rRF) is 5%, and...

Currently, Bloom Flowers Inc. has a capital structure consisting of 20% debt and 80% equity. Blooms debt currently has an 6% yield to maturity. The risk-free rate (r RF ) is 4.5%, and the market risk...

Currently, Bloom Flowers Inc. has a capital structure consisting of 20% debt and 80% equity. Blooms debt currently has an 5.6% yield to maturity. The risk-free rate (rRF) is 5%, and the market risk...

36. Currently, Bloom Flowers Inc. has a capital structure consisting of 20% debt and 80% equity. Blooms debt currently has an 8.5% yield to maturity. The risk-free rate (rRF) is 4.3%, and the market...

Currently, Bloom Flowers Inc. has a capital structure consisting of 20% debt and 80% equity. Bloom's debt currently has an 8% yield to maturity. The risk-free rate is 5%, and the market risk premium...

answer of each part 26. Currently, Bloom Flowers Inc. has a capital structure consisting of 20% debt and 80% equity. Bloom's debt currently has an 8% yield to maturity. The risk-free rate (TRF) is...

Question 1- If you consider to carry out an project about the reuse of treated water in urbanized area what kind of information that you need and which components of infrastructure systems do you...

The Engine Division provides engines for the Tractor Division of a company. The standard unit costs for Engine Division are: Direct materials $ 600 Direct labor 1,200 Variable overhead 300 Fixed...

What hormones in the excretory system would be released due to heavy physical activity?

Draw a class diagram and its relationship based on the following statements. You can use any UML tool/software to represent your class diagram. Do NOT copy and paste your diagram, use the attachment...