Question: A recent startup technology company that has a very low market cap is looking to calculate the return required by share holders using the build-up

A recent startup technology company that has a very low market cap is looking to calculate the return required by share holders using the build-up method. Historically, long-term government bonds have been 4.8%, and the equity risk premium is approximately 6%. The startup premium and the micro-cap premium are both 5%. What is the return required by share holders? 20.8

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!

Question 3 Partially correct Mark 3.93 out of 6.67 P Flag question Manufacturing Cost Flows with Machine Hours Allocation On November 1, Robotics Manufacturing Company's beginning balances in...

Sugar Cane Refining And Processing Company: A Comprehensive Case In Measuring A Firm's Cost Of Capital Denis O. Boudreaux, University of Louisiana at Lafayette, USA S. P. Rao, University of Louisiana...

Analyze article and answer the following questions: Possible solutions to such situations (applying the lesson of the day). Select one possible solution to the case. Explanation for how you select...

Bloomberg CASEO Businessweek STUDIES 4 Weighted Average Cost of Capital Analyze how the theoretical concepts This lesson explores how several companies and industries are of weighted average cost of...

Check the cost of equity determined in the case against the current Coca Cola stock price. Find the recent growth rate and use the formula Return on equity = (Dividend next year divided by current...

Questions for Coca Cola Case Can you find an error in equation 1 Look at Figure 1, how well does the regression line predict the actual results? What does the R2 in the regression equation (table1)...

I need short journal entries for these articles, please. 1) Learning Objectives By the end of this section, you will be able to: Explain the various functions of money Contrast commodity money and...

Can you find an error in equation 1? (This is LITERALLY the entire question.) Journal of Business Case Studies - November December 2010 Volume 6Number 6 Calculating The Beta Coefficient And Required...

Discuss the Beta results of the calculation. What does it mean? Does it make sense to you with what you know about Coca Cola? Journal of Business Case Studies - November December 2010 Volume 6Number...

principles of finance questions attached along with a supplement for the questions INT'L BUS. MACH. NYSE-IBM TIMELINESS SAFETY TECHNICAL 2 1 3 High: Low: Raised 8/2/13 126.4 54.0 RECENT PRICE 94.5...

I need help developing the following from the 2015 Starbucks Annual Report: Pro Forma financial statements (Balance Sheet and Income Statement) for the next two fiscal years, assuming a 10% growth...

A and B are independent events P(A)= 0.6, and P(A and B) = 0.3 .Find P(B).

Do exercise 3 using the experiences instead of the salaries. a. Find the population mean for salary. b. Compare this population mean to the sample average for salary. In particular, how many standard...

Ch . 1 Help Save 8 Exit Which statement below best describes the accounting equation? Multiple Choice Financing activities equal investing and operating activities. The change in retained earnings...

AJB Real Estate purchased a ten-acre tract of land for $320,000. The company divided the land into four lots of two and one-half acres each. Lot 1 had a beautiful view of the mountains and was valued...

Biomet, Inc. provided the following disclosures in Note 5 of its 2008 annual report. It describes the company's investments in available-for-sale equity securities (dollars in millions). a. Compute...

Calculate the critical heat flux on a large horizontal surface for the following fluids at 1 atm: mercury, ethanol, and refrigerant R-134a. Compare these results to the critical heat flux for water...

In January 2012, the management of Stefan Company concludes that it has sufficient cash to permit some short-term investments in debt and stock securities. During the year, the following transactions...

Incomplete manufacturing cost data for Ikerd Company for 2010 are presented as follows for four different situations. Instructions(a) Indicate the missing amount for each letter.(b) Prepare a...

Given the needs of the company s marketing team, both upper and micro tiers of influencers that OOFOS should recruit. Any suggestion?

Even after jobs are first priced using a wage-trend line, what other challenges may cause you to adjust some rates upward?

Assume that your company has a properly conducted compensation program. If a group of employees asks you why they receive different hourly pay rates even though they perform the same job, how would...

What is the difference between absolute and relative pay?