Question: Risk and Return/Cost of Capital Using spreadsheets to solve complex problems is a key competence - in fact a requirement - for many middle management

Risk and Return/Cost of Capital

Using spreadsheets to solve complex problems is a key competence - in fact a requirement - for many middle management positions in the workplace. Corporate finance provides many opportunities to use MS Excel to solve problems that cannot easily be solved manually.

In this assignment, you will be applying the basic calculation tools to analyze the cost of capital for a corporation and apply calculate the weighted average cost of capital.

Question 1:

Find the following Betas for the companies listed below: (use www.globeinvestor.com)

Assuming a risk free rate (R_f) of 2% and the Return from the market (R_m) of 6.5% calculated the expected return of each company based on the Capital Asset Pricing Model.

Company	Stock Symbol	Beta	Expected Return
TD Bank	TD-T
Royal Bank	RY-T
Canadian Tire Corporation	CTC.A-T
Suncor Energy	SU-T
Sierra Wireless	SW-T
Twitter	TWTR-N
Facebook	FB-Q
Microsoft	MSFT-Q
Apple	AAPL-Q
Amazon	AMZN-Q
Alphabet Inc. (Google)	GOOGL-Q
Starbucks	SBUX-Q

Re-order your list from the lowest beta to the highest and compare their expected return.

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!

Bo Humphries, CFO of Clark Upholstery, is analyzing a capital acquisition, the renewal or replacement of a fixed asset (the only depreciable asset they own). You have already completed an analysis of...

Planning is one of the most important management functions in any business. A front office managers first step in planning should involve determine the departments goals. Planning also includes...

Company Stock and Cost of Capital Analysis In this assignment you will Perform a detailed stock price analysis on your company's stock, and Calculate and analyze the company's Weighted Average Cost...

Using spreadsheets to solve complex problems is a key competence - in fact a requirement for many middle management positions in the workplace. Corporate finance provides many opportunities to use MS...

Given the following information for McCumber Energy: Debt - 7,000 6-percent coupon bonds outstanding, $1,000 par value, 25 years to maturity selling for 106 percent of par, the bonds make semi-annual...

Using spreadsheets to solve complex problems is a key competence in fact a requirement for many middle management positions in the workplace. Corporate finance provides many opportunities to use MS...

Purpose: Using spreadsheets to solve complex problems is a key competence - in fact a requirement - for many middle management positions in the workplace. Corporate finance provides many...

Assignment 2: Financial Statement Analysis june 13,12,11, 10 june 30 th stock price Weighting: 7% Marks: __/35 Purpose: Using spreadsheets to solve complex problems is a key competence - in fact a...

Purpose: Using spreadsheets to solve complex problems is a key competence in fact a requirement for many middle management positions in the workplace. Corporate finance provides many opportunities to...

What do you think is/are the best strategies to promote communication between architects, engineers, and urban planners? Why might one way of doing so be more or less effective than another?

Answer the following using the appropriate z-score table. a.) What is the area to the left of the z-score z = -1.42? (round answer to four decimal places) The area is approximately b.) What is the...

Question 9 1 pts According to the text, choosing a CEO from the internal managerial labor market usually results in what kind of turnover of existing employees? no impact on turnover more turnover...

Abylli Company does not use a database system; rather, it maintains separate data files in each of its departments. Accordingly, when a sale occurs, the transaction is initially recorded in the sales...

Dell computers sells laptops. Table 1 presents the 12 month sales for the year 2017 (10 points). Month Sales (in thousands) Jan 10 Feb 8 Mar 12 Apr 15 May 18 Jun 16 Jul 12 Aug 14 Sep 19 Oct 21 Nov 11...

a- Explain the difference between price risk and re investment rate risk. b- which of the bonds has the most price risk?why? c-Assume that you bought 5-year, 15-year, and 25-year bonds, all with a 10...

Marsellus is self-employed. He is supplied by and part owner of a large nursery and greenhouse which has retail sales, but his primary interest is his landscape design business. His specialty is...

6 Theory of Machines 5. A shaft carries five masses A, B, C, D and E which revolve at the same radius in planes which are equidistant from one another. The magnitude of the masses in planes A, C and...

A 20-year-old student wants to save $3 a day for her retirement. Every day she places $3 in a drawer. At the end of each year, she invests the accumulated savings ($1,095) in a brokerage account with...

The Neal Company wants to estimate next years return on equity (ROE) under different leverage ratios. Neals total assets are $14 million, it currently uses only common equity, and its...

Draw a graph that shows roughly the shape of the probability distributions for High Tech, U.S. Rubber, and T-bills.

5. A professor of political science wants to predict the outcome of a school board election. Three candidates, Ivy (I), Bahrn (8), and Smith (5) are running for one position. The professor places the...

4.19. The following bill of materials represents the major components for a computer system. Complete the MRP records below. Note the following: Production plans (the MPS) for the 800 Deluxe...

3. Kevin and June Park (K and J) are in the process of buying a new house. Three houses, A, B, and C, are available. The Parks have agreed on two criteria for the selection of the house: yard work...