Practice Questions 1. Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You have been provided with the following data: rRF = 5.00%; RPM = 6.00%; and b = 0.90. Based on the CAPM approach, what is the cost of equity fro
Homework Chapter 5 Solutions
_ _ 1. Assume that all interest rates in the economy decline from 10% to 9%. Please calculate the price change for each of the bonds below a. An 8-year bond with a 9% coupon. b. A 1-year bond with a 15% coupon. c. A 3-year bon
Chapter 6 Homework
1. Bertin Bicycles has a beta of 0.88 and an expected dividend growth rate of 4.00% per year. The T-bill rate is 4.00%, and the T-bond rate is 5.25%. The annual return on the stock market during the past 4 years was 10.25%. Investors ex