Ünite Sınavı Soruları

XYZ Corp. distributes 50% of its net income as dividends. The firm’s ROE is 20% and last year stockholders received $1 dividends per share. Currently the stock sells at $20. What is the cost of equity for XYZ Corp?

1. The cost of equity is the return a company requires to decide if an investment meets capital return requirements.
2. A firm uses cost of equity to assess the relative attractiveness of investments
3. A business can raise equity capital either through a common stock issue or a preferred stock issue.

Which of the statements above is/are true for cost of equity?

A corporation borrows $100,000 as a bank loan at an annual interest rate of 5%. The company pays 30% corporate tax rate. What is the after-tax rate of borrowing for this corporation?

X Corp.'s capital structure consist of %40 long-term dept and %60 common equity. The interest rate on the corp.'s long-term dept is %12 and common shareholders are paid %18 on equity capital. If the tax rate of the corp. is %25, what would be the WACC for the corp.?

XYZ Corp. has a historical beta of 0.9 and the expected market return is 8%, whereas the risk-free rate is 2%. What is the required return of the stockholders of XYZ?

XYZ Corp. distributes 70% of its net income as dividends. The firm’s ROE is 20% What is the expected growth rate?

XYZ Corp. borrows $200,000 as a bank loan at an annual interest rate of 10%. The company pays 25% corporate tax rate. What is the after-tax rate of borrowing for XYZ Corp.?

... is a benchmark rate that represents the interest rate at which banks offer to lend funds to one another in the international interbank market for short-term loans.

What is the benchmark rate that represents the interest rate at which banks offer to lend funds to one another in the international interbank market for short-term loans?

According to the Dividend Growth Model, the cost of equity reflects ..........

ABC Corp. in the above example grows at 6%. Last year’s dividend was $1.50 per share and currently the stock sells at 29. If ABC issues new shares to raise external equity, flotation costs of $4/share will be incurred. What is the cost of external equity?

Which one of the following is the composite cost of the last dollar of new capital raised?

Which one of the following is the uncertainty inherent to the entire market or entire market segment?

Which of the following is a benchmark rate that represents the interest rate at which banks offer to lend funds to one another in the international interbank market for short-term loans?

ABC Corp. has the following optimal capital structure:
Long-term Debt 50%
Preferred Stocks 10%
Common Equity 40%
The interest rate on the company’s long-term borrowings is 10%. Preferred stockholders require 12% return on their investments and common shareholders are paid 17% on equity capital. The company has a tax rate of 30%. What is the WACC for ABC Corp.?

A corporation has a bond issue outstanding for which the yield-to-maturity is % 6.75. Analysts estimate a risk premium of % 4.80 of the company's stock. What is the expected cost of equity of this corporation?

Which of the following equations is used to measure WACC?

I. CAPM

II. Bond-Yield-Plus-Risk-Premium Model

III. Dividend-Growth Model

Which of the above is/are among the methods used for estimating the cost of equity?

ABC Corp. recently issued preferred stocks for raising additional $200,000 of equity funds. Investors bought each share paying a price of $100, however ABC had to incur 5% flotation costs on the preferred stock issue. The preferred dividends are $10 per share. What is the return of the preferred stockholders?

ABC Corp. has a historical beta of 1.25 and the expected market return is 10%, whereas the risk free rate is 5%. What is the required return of the stockholders of ABC?