Financial Management Study Guide
Interest rate levels: whenever the supply curve is upward sloping it means that in each market
the investor is willing to supply more capital the higher interest rate they receive on their capital.
On a downward
1. after tax cost of debt
$36.25 semiannual payment
5.14% after tax cost of debt
1. Based on the CAPM what is the firms cost of equity?
CAPM= ri= rfr+(rm-rfr)(Bi)
Chapter 12: Cash Flow Estimation and Risk Analysis
Salvage Value- The price that a company receives for a fixed asset at the end of the project.
Taxed paid on salvaged assets= Tax rate X (Salvage value-Book value)
We assume cash flows occur at the end of