20. The common stock of BG Company has a beta of .9.
The risk-free rate is 6 percent and the market risk premium
(RPM) is 5 percent. Assume the firm will be able
to use retained earnings to fund the equity portion of its capital
budget. What is the company’s cost of retained earnings,
rs?
a. 8.5%
b. 11.5%
c. 12.3%
d. 13.0%
e. 13.7%
24.
- 20 The Common Stock Of Bg Company Has A Beta Of 9 The Risk Free Rate Is 6 Percent And The Market Risk Premium Rpm 1 (103.8 KiB) Viewed 38 times
Question 24 2 pts You have been provided the following balance sheet regarding Big Company. Big Company had EBIT of $45,000, a tax rate of 35% and a WACC of 11.1%. What is BC's Economic Value Added (EVA)? Assets Liabilities and Owner's Equity Cash 50,000 A/P 25,000 Inv. 25,000 Accruals 25,000 A/R 25,000 Notes Payable 50,000 Total Current Assets 100,000 Total Current Liabilities 100,000 Common Stock 100,000 Fixed Assets 200,000 Retained Earnings 100,000 Total Assets 300,000 Total Liabilities and Owner's Equity. 300,000
a. .($11,000) b. ($7,500) c. $1,500 d. $7,500 e. $11,000