The manager of Sensible Essentials conducted an excellent seminar explaining debt and equity financing and how firms should analyze their cost of capital.
The manager of Sensible Essentials conducted an excellent seminar explaining debt and equity financing and how firms should analyze their cost of capital. Nevertheless, the guidelines failed to fully demonstrate the essence of the cost of debt and equity, which is the required rate of return expected by suppliers of funds.
You are the Genesis accountant and have taken a class recently in financing. You agree to prepare a PowerPoint presentation of approximately 6–8 minutes using the examples and information below:
- Debt: Jones Industries borrows $600,000 for 10 years with an annual payment of $100,000. What is the expected interest rate (cost of debt)?
- Internal common stock: Jones Industries has a beta of 1.39. The risk-free rate as measured by the rate on short-term US Treasury bill is 3 percent, and the expected return on the overall market is 12 percent. Determine the expected rate of return on Jones’s stock (cost of equity). Here are the details:
Jones Total Assets
Long- & short-term debt $600,000 Common internal stock equity $400,000 New common stock equity $1,000,000 Total liabilities & equity $2,000,000
Develop a 10–12-slide presentation in PowerPoint format. Perform your calculations in an Excel spreadsheet. Cut and paste the calculation into your presentation. Include speaker’s notes to explain each point in detail. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M4_A2.ppt.
By Monday, August 20, 2012, deliver your assignment to the M4: Assignment 2 Dropbox.
No Answer Can Be BETTER Than This!! GUARANTEED!!!
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Cost of xxxxxxxx
Cost xx equity is defined xx xxx return which xxxxxxxxxxxx xxxxxxx xx their xxxxxxxxxxxx It is the xxxxxxxx xxxx xx return xxx the xxxxxxxxxxx but it xx cost xxx xxx xxxxxxxx xxxx xx xxxxxx xxx xx xxxxxxxxxx xx xxx xxxxx Dividend xxxxxxxxx xxxxx xxx Capital Asset xxxxxxx xxxxxx xxx the ways through xxxxx xxxx of equity xx xxxxxxxxxxx
xxxxxxxx for xxx xxxx xxx models xxx xxxxx xxxxxxx
xxx = xxxxxxxxxxxx
xx = Market return
xxx Risk xxxx return
CAPM, defined at xxxxxxxxxxxxx xxxxxxxxx from http://www.investopedia.com/terms/c/capm.asp
Dividend xxxxxxxxx xxxxxxx
xxx = Dividend per share/Current Market xxxxx xx stock + Growth xxxx xx xxxxxxxxxx
xxxx of xxxxxx
xxxxx xxx the xxxxxxxxx xxxxx company takes to finance the xxxxxxx xxxxxxxxx xxxx xxxx xx pay xxxxxxxx xx xxxxx xxxxxxxxxx xx the xxxx of xxxx xx xxxx xxxxxxxx which company has xx xxx xx xxx borrowings and xxxxxxxx xx is taken xxxxx xxx as it is the tax deductible expense.
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|xxxx of Debt|
|xxxxxxxx xxxx||x xx xxxx formula|
|xxx x xx PVIF formula is||6.0147727404||xxxxxx|
|Cost of Equity|
|xxxx xx xx used xx required xxxx of return|
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