Thompson Co. has a beta of 1.35. The market risk premium is 8.5%. Thompson's next annual dividend

Fantastic news! We've Found the answer you've been seeking!

Question:

Thompson Co. has a beta of 1.35. The market risk premium is 8.5%. Thompson's next annual dividend is expected to be $2.40, paid in exactly one year. Dividends are expected to grow at 6% per year indefinitely. The company's bonds have a coupon rate of 8% and are priced in the market at par value.The company's weighted average cost of capital (WACC) is 10%, and itstax rate is 25%. Thompson's current share price is $40 per share.

What is Thompson's cost of equity capital?[Express your answer in percentage terms (i.e. 58%), rounded to the closest whole number with no decimals]

Cost of equity capital =%

What is Thompson's market value debt-equity (D/E) ratio?[Express your answer in DECIMAL terms (i.e. 4.56), rounded to 2 (TWO) decimals places]

D/E ratio =

Posted Date: May 18, 2024 03:07 AM

See More Questions

Informative Speech Critique Evaluating Rhetorical Choices You may just number the questions and add a paragraph or two to answer - 1. Did you find the speaker credible? Why or why not? 2. Did the...
At December 31, 2010, before any year-end adjustments, the accounts receivable balance of Digital Electronics Company is $150,000. The allowance for doubtful accounts has a $6,800 credit balance....
Louise Corporation entered into a leasing arrangement with Wilder Leasing Corporation for a certain machine. Wilders primary business is leasing; it is not a manufacturer or dealer. Louise will lease...
While designing a mixer-settler extraction system, you obtain a mass transfer correlation from a book. Unfortunately, the book does not explain which model was used. Which model would you use to...
You have been hired as an accounting consultant by Watson Company to evaluate its financial reporting policies. Watson is a small corporation with a few stockholders owning stock that is not publicly...
Forral Company has never paid a dividend. But the company plans to start paying dividends in two years that is , at the end of Year 2 . The first dividend is expected to equal $ 3 per share. The...
Consider a variant of the Bargaining game (Figure 1) in which me, even, and you by player 1 correspond to offers of (2, 0), (1, 1), and (0, 2). As in the original example, if player 2 rejects an...
8. Evaluate: S 2 3et dt + 9 Round your answer to four decimal places.
Selected financial data from the June 30 year-end statements of Safford Company are given below: Total assets Long term debt (12% interest rate) Total stockholders' equity Interest paid on long-term...
A transferable LC for USD 200,000 was transferred by M in tavor of X for USD 85,000 and in favor of Y for USD 85,000. Subsequently an amendment calling for inspection certifi was not acceptable to Y....
There are two people who apply for a job. One is highly skilled, the other one is not. Their productivities (profits that they bring to the employer) are $1000 and $300, respectively. Their...
To identify if a company uses the aggressive investment policy in the investment of current assets, the ratio of current assets holding (current assets divided by total assets or sales) must be less...
Kohler Corporation reports the following components of stockholders equity on December 31, 2016: Common stock$20 par value, 100,000 shares authorized, 50,000 shares issued and outstanding $ 1,000,000...
Do public and private companies follow the same set of accounting rules? Explain.
Traditionally, accountants have been most involved with which portion of the HRM/payroll cycle? a. hiring b. payroll c. training d. performance evaluation
What is the formula for calculating equity per share?
Which of the following statements is true? a. Financial statements report the value of employee knowledge and skills. b. Turnover and absenteeism are costly. c. Outsourcing of HRM and payroll...

Thompson Co. has a beta of 1.35. The market risk premium is 8.5%. Thompson's next annual dividend

Question:

Expert Answer:

Students also viewed these finance questions