Li & Associates’ common stock currently trades at $55 a share.  It is expected to pay an annual dividend of $1.65 a share at the end of the year (D1 = $1.65), and the constant growth rate is 8.7 percent a year.  What is the company’s cost of common equity if all of its equity comes from retained earnings?

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Leslie Industries is considering the following independent projects for the coming year: Project RequiredInvestment ExpectedRate of Return Risk X $8 million 11.5% High Y   8 million   6.5% Average Z   3 million   7.0% Low Leslie’s WACC is 8 percent, but it adjusts for risk by adding 2 percent to the WACC for high-risk projects and subtracting 2 percent for low-risk projects.  Which project(s) should Leslie accept assuming it faces no capital constraints?

Loyd & Associates’ common stock currently trades at $65 a share.  It is expected to pay an annual dividend of $3.58 a share at the end of the year (D1 = $3.58), and the constant growth rate is 5.7 percent a year.  What is the company’s cost of common equity if all of its equity comes from retained earnings?

If a firm’s beta is 1.2, the risk-free rate is 4.5%, and the expected return on the market is 9.5%, what will be the firm’s cost of equity using the CAPM approach?

If a firm’s beta is 1.4, the risk-free rate is 5.5%, and the expected return on the market is 12.5%, what will be the firm’s cost of equity using the CAPM approach?

Leslie Industries is considering the following independent projects for the coming year: Project RequiredInvestment ExpectedRate of Return Risk X $3 million 12.0% High Y   2 million 10.0% Average Z   5 million 10.5% Low Leslie’s WACC is 11.5 percent, but it adjusts for risk by adding 2 percent to the WACC for high-risk projects and subtracting 2 percent for low-risk projects.  Which project(s) should Leslie accept assuming it faces no capital constraints?

Which of the following change in the working capitals increase the cash flow of the firm (that is, result in the cash inflow), holding other things constant?