Cost and Debt Equity

1.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)?

2.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 $2,000,000

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

excel and word

Show more >
  • drprissy
    drprissy
    1 orders completed
    $14.95
    ANSWER
    Tutor has posted answer for $14.95. See answer's preview

    ******** in doc ******

    Click here to download attached files:

    COST AND DEBT EQUITY.doc

    Buy

Learn more effectively and get better grades!

Ask a Question