Swamp & Sand's current dividend is $1.7 per share. Analysts expect the firm's growth rate of 2% pe
continue indefinitely. The current stock price is 41.7 . Calculate the required return on equity for th
Webster Global Services has a Debt-to-Equity Ratio of 0.5. What is the percentage of capital that
is debt?
Webster Global Parnters (WGP) is evaluating an investment in Pulang, SA., a distributor of home
appliances. As with any venture capitalist, they seek to sell out after 5 years. WGP estimates a

Enter answer as ##.#, to one decimal point. Do not discount
Time
5 years
required rate of return
9.40%
Long term growth rate
4.90%
Free cash flow in year 5
$137
Terminal Value = Final Project Year Cash Flow x (1 + Long-term cash flow growth rate) / (Discount rate
- long-te
Terminal Value
3193.6222222222
CF*(1+g) / (k-g)
Enter as ##.#% without the % sign.
Risk Free Rate
3
Beta
2.8
Expected Market Return
2
Required Rate of Return = RFR + Beta *market risk premium
8.6
Re = Rf + B * MRP
Enter answer as ##.#, to one decimal point. Do not add zeros for millions.
Free Cash Flow Multiple
8.7
Free Cash Flow in the 5th year
$130
Terminal Value of Project
FCF multiple x FCF in last year
$1,131.0
P/E Ratios
0.5
5/10
ie for every $10 of equity capital the company has $5 of debt capital
Equity Capital
20.00%
Debt-to-Equity / (Debt-to-Equity + 1)= Debt % 100 - Debt% = Equity %
Market Rate of Return
7.20%
Risk Free Rate
2.10%
Market Risk Premium
5.10%
appliances. As with any venture capitalist, they seek to sell out after 5 years. WGP estimates a
required rate of return of 9.4%. After five years the growth rate is project to be 4.9% per year.
Free cash flow in year 5 is expected to be $137 million. Pulang is expected to be sold at its
terminal value. Calculate the terminal value.
Your firm's beta is 0.8, comparable T-bond rates are 3, and the market risk premium is 2. Calculate
the required return on your stock.
Webster Global Partners (WGP) is evaluating an investment in MiCasa, SA., a distributor of home
appliances. As with any venture capitalist, they seek to sell out after 5 years. WGP estimates a
free cash flow multiple of 8.7. Free cash flow in year 5 is expected to be $130 million. MiCasa, S.A.
is expected to be sold at its terminal value. Calculate the terminal value using the multiple
method.
Webster Global Services has a Debt-to-Equity Ratio of 0.5. What is the percentage of capital that
is equity?
Grokster Investment analysts have determined the market rate of return to be 7.2%. In
evaluating investments over a 20 year time horizon, they use the 20 year T-Bond rate as
the risk-free rate which is currently 2.1%. In order to evaluate investments, calculate the
Market Risk Premium (MRP).

Debt
40
Equity
40
100%
% Debt = Debt / Assets Since Assets = Debt + Equity. % Debt = Debt / (Debt + Equity)
Debt
78
Equity
88
Debt to Equity
88.64%
Assets = Debt + Equity % Equity = Equity / Assets % Equity = (Debt + Equity)
BL = BU*[1+(1-T)*(D/E)]
BL = BU*[1+(1-T)*(D/E)]
BU
1.5
St. Louis Brewing Co. has an unleve
D/E
0.7
they want to add debt until their de
Tax Rate
20%
BL = BU*[1+(1-T)*(D/E)]
2.34
Swamp and Sand Industries has outstanding debt of 40and equity of 40. Calculate the
debt as a percentage of total assets.