Computation of cost of equity

Related BrainMass Solutions

• Estimation of Weighted Average Cost of Capital (WACC)

  The answer is given in three steps: computation of after-tax cost of debt, calculations of cost of equity, and computation of WACC.

• Explaining Weighted Average Cost of Capital


  One perplexing issue is how to measure the cost of equity. For instance, what is the cost of retained earnings?

• Calculating cost of equity using capital asset pricing model

  Computation for Amazon's Cost of Equity using CAPM Cost of equity for Amazon = risk free rate + beta*Risk premium = RF + Beta*(RM-RF) = 0.10% + 0.77*(5%-0.10%) = 3.94% The above cost of equity computation used the capital asset pricing model.

• Income statement and balance sheet

  Net sales revenue Cost of goods sold Gross profit Net income Balance sheet, December 31, 20X2 Statement of Owner's Equity, December 31, 20X2 Do the following Net Sales Computation: Cost of Goods Sold Computation: Gross

• Computation of Weighted average Cost of Capital (WACC)

  Solution: WACC = [Weight of debt * After-tax cost of debt] + [Weight of preferred stock * Cost of preferred stock] + [Weight of equity * Cost of equity] Step 1: To find before-tax and after-tax cost of debt Before-tax cost of debt is the yield

• What is the WACC for Lee Family Firms?

  Formula Weighted Average cost of capital (WACC) = (Weight of equity * cost of equity) + (weight of debt * cost of debt) Computation of weights We shall compute market weights of debt and equity Equity Capital = Price per share * number of shares

• APV, Unlevered cost of capital, Debt=equity ratio

  233679 APV, Unlevered cost of capital, Debt=equity ratio A firm has a cost of equity of 13.8% and a pre-tax cost of debt of 8.5%. The debt-equity ratio is .60 and the tax rate is .34. What is the firm's unlevered cost of capital?

• WACC & Capital Structure

  (Effective Interest on Long term Debt) Cost of Equity Under Bond yield method = 10.39% Computation of WACC (Option 1 of cost of equity) Source Amount Cost tax Net Cost Weight WACC Debt $17,043 3.39% 1.19%

• Wal-Mart: Cost of Equity, WACC, Unlevered Cost of Equity, & Beta

  Cost of equity = 10.13% WACC = 7.49% Unlevered cost of equity = 7.49%.

• For Target: Estimate your company's cost of equity. Estimate your company's weighted-average cost of capital. Estimate your company's unlevered cost of equity.

  s=AIG Estimate your company's cost of equity. Estimate your company's weighted-average cost of capital. Estimate your company's unlevered cost of equity. Please see the attached file. Computation done in excel for you.