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 xx defined xx xxx xxxxxx which xxxxxxxxxxxx xxxxxxx xx their investments. xx xx the required xxxx of return for the xxxxxxxxxxx xxx xx is cost for xxx company. Cost xx equity xxx xx calculated in xxx xxxxx Dividend valuation model xxx Capital xxxxx Pricing xxxxxx are xxx xxxx xxxxxxx which cost of xxxxxx xx xxxxxxxxxxx
xxxxxxxx xxx xxx xxxx the models are xxxxx below:-
xxx = xxxxxxxxxxxx
xx x Market return
xxx Risk xxxx xxxxxx
xxxxx xxxxxxx at xxxxxxxxxxxx. Retrieved xxxx xxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxxx
xxxxxxxx xxxxxxxxx xxxxxxx
xxx x Dividend per xxxxxxxxxxxxx Market xxxxx xx stock + xxxxxx rate xx dividends.
Cost of xxxxxx
Debts are xxx borrowing xxxxx company takes xx finance the xxxxxxx therefore xxxx have xx xxx interest on those xxxxxxxxxx xx the xxxx of debt xx xxxx interest which company xxx to pay xx xxx xxxxxxxxxx xxx xxxxxxxx it xx xxxxx xxxxx xxx xx xx xx xxx tax xxxxxxxxxx xxxxxxxx
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|xxxx xx Debt|
|Interest xxxxx||x xx xxxx xxxxxxx|
|The x in PVIF formula xx||6.0147727404x||10.50%|
|xxxx of xxxxxx|
|xxxx xx xx used as xxxxxxxx xxxx xx return|
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