Task 9: Estimate the Sustainable Growth Rate Estimate the sustainable growth rate as at the end of the fourth
year, based on the following assumptions: • The sustainable profit margin is estimated to be equal to that estimated for the fourth year, based on the fourth year Net Income and Sales. • The sustainable asset turnover is estimated to be equal to that estimated for the fourth year, based on fourth year end Total Assets and Sales. • Assume a target Leverage Ratio as being equal to 150%. • Assume a target Retention Ratio as being equal to 50%.
Task 10: Estimate a required return based on CAPM Estimate the required return based on CAPM, based on the following assumptions: • Assume the Risk Free Rate equals 1.0% • Assume Beta equals 2.0 • Assume a Risk Premium of 4.0%
Recently Asked Questions
- What is SteelTech's cost of capital? Cost of Equity = Risk-Free Rate + *(Equity Risk Premium) After-Tax Cost of Debt = (1-Tax Rate) * Pre-Tax Cost of Debt
- Fred's income this past year included salary of$70 000,$3 000 in interestincome, a$4 000 capital gain from selling some stock and a$5000 inheritance. For
- What is a practical way to make sure you stay within your budget and achieve your savingsgoals? A. Reduce your spending. B. Get a second job. C. Use a credit