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internal growth = ROE x (1-DPO)
= 20% x (1-0.4)
= 12%

To stimulate the economy, I think it should be done by decreasing reserve requirement because bank can lend more money to the business sector

Because risky firms has high debt which it has to repay in the future, when it has high debt it need cash to repay the debt. So, it prefer to lower its target payout ratio. Furthermore, pay lower...

Suppoes that interest is paid annually and face value = 1000, current yield = 7.27%
YTM = 6.6023%
It will be much easier if you use the financial calculator.

Increase in debt will reduce the cost of capital because cost of debt is always lower than cost of equity.

growth rate in earning
arithmetic means = 9.41%/yr
geometric means = 8.02%/yr
dividend in 2005 = 6.5 x 40%
market price = 36
cost of retained earning in 2005= 2.6/36 + 8.02%=15.24% (if estimated...

1.Look at the bottom line of the income statement and you will see net income.
2.roughly, the net cash flow = net income + depreciation + amortization.
3. NOPAT = net income + Interest(1- Tax rate)...

No, because different investment project will have different risk. Firm should calculate the cost of capital separately in each investment project.
I will clarify it later tomorrow, I have to go now.

I will arrange from most ot least risk.
1.Common stocks of large companies
2.Preferred stock of large companies
3.Long term government bonds
4.Certificates of deposit

**** Sory****
the above calculations is quite wrong because I just see the word annual from "Effective Annual Rate is 8.10%"
So, I will correct the calculation now.
However, you informations are...

Effective annual rate = (1+I)^n - 1
= (1.081)^2 -1
=0.168561 or 16.86%

ke = Cost of equity = D1/P0 + g
from your information I'am not sure about the given div whether it is D0 or D1, but I think div of 2 is already D1, so I don't multiply 2 with 1.07
ke = 2/22.5 +...

In Addition, WACC compose of debt and equity, I conclude that with higher tax firm prefre debt to equity since use more debt will reduce WACC

Cost of debt after tax = cost of debt * (1-T)
Higher income tax will induce the firm to use more debt because debt is tax deductable
and use more debt will reduce the WACC of firm.Suppose loan...

rj = rfr + beta(rm-rfr)
12.5 = 4.5 + beta(10.5-4.5)
beta = 1.3333

FV = PV(1+K)^n
I will take ln or natural log in both sides of the equation
ln(FV) = ln(PV) + ln(1+K)^n
ln(FV) = ln(PV) + n*ln(1+K)
then I move n from the left hand side to the right hand side...

Net profit margin = net profit/total sales x 100

1.)company's margin profit is -15,000/160,000=-9.3750%

2.)if the company's sales were 400,000, the net income would be 400,000 X -9.3750%=...

This is the answer for the question
Variance of Portfolio is = (0.3^2*0.09^2)+(0.7^2*0.25^2)+2(0.3)(0.7)(0.2)(0.09)(0.25)
= 0.000729 + 0.030625 + 0.00189
= 0.033244

We've got the...

Variance of Portfolio is = (0.3^2*0.09^2)+(0.7^2*0.25^2)+2(0.3)(0.7)(0.2)(0.09)(0.25)
= 0.000729 + 0.030625 + 0.00189
= 0.033244

We've got the variance and then we can caculate the...