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FIN330 Phoenix Week 4 Business Finance Quiz

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An estimated WACC computed using some sort of proxy for the average equity risk of the projects in a particular business unit is known as the: Divisional WACC Apple's 9 percent annual coupon bond has 10 years until maturity and the bonds are selling in the market for $890. The firm's tax rate is 36 percent. What is the firm's after-tax cost of debt? 6.95 percent A stock has an expected return of 15 percent and a standard deviation of 20 percent. Long-term Treasury bonds have an expected return of 9 percent and a standard deviation of 11 percent. Given this data, which of the following statements is correct? The bond investment has a better risk-return trade-off. A company's current stock price is $65.40 and it is likely to pay a $2.25 dividend next year. Since analysts estimate the company will have an 11.25 percent growth rate, what is its expected return? 14.69 percent A company has a beta of 0.25. If the market return is expected to be 8 percent and the risk-free rate is 2 percent, what is the company's required return? 3.50 percent A company has a beta of 0.85. If the market return is expected to be 9 percent and the risk-free rate is 2.5 percent, what is the company's required return? 8.025 percent A company's current stock price is $84.50 and it is likely to pay a $3.50 dividend next year. Since analysts estimate the company will have a 10 percent growth rate, what is its expected return? 14.14 percent An investor owns $8,000 of Adobe Systems stock, $5,000 of Dow Chemic ...
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