Business, 06.05.2020 07:01, latiamason16
Estimating WACC and Expected Growth in Dividends ModelAssume FedEx Corporation (NYSE: FDX) was trading at $107.47 at May 31, 2011. Its dividend per share was $0.36, its market beta was estimated to be 0.7, its average borrowing rate is 9.5%, and its marginal tax rate is 36%. FedEx's market value of equity (market cap) is $32.95 billion and its total market value (enterprise value) is $34.31 billion. Assume a risk-free rate of 5.4% and a market risk premium of 5.8% to answer the following requirements.(a) Estimate FedEx's cost of debt capital, cost of equity capital, and weighted average cost of capital. (Round your answers to one decimal place.)Cost of debt capital = Answer%Cost of equity capital = Answer%Calculate the weighted average cost of capital. (Use rounded answers from above. Do not round until your final answer. Round to one decimal place.)Weighted average cost of capital = Answer%(b) Using the dividend discount model, and assuming a constant perpetuity for dividends, estimate FedEx's intrinsic value per share. (Use the rounded cost of equity capital calculated in (a). Round your answer to two decimal places.)$Answer(c) Using the Gordon growth DDM, and assuming next period's dividends equal $0.36 and grow at a constant rate for each period thereafter, infer the market's expected growth in dividends that are necessary for FedEx's intrinsic value from the model to equal $107.47 per common share. Assume that its cost of equity capital is 9.5%. (Do not round until your final answer. Round to one decimal place.)
Answers: 3
Other questions on the subject: Business
Business, 22.06.2019 15:00, samanthamunevar7218
Which of the following is least likely to a team solve problems together
Answers: 1
Business, 22.06.2019 15:30, gracerich
University hero is considering expanding operations beyond its healthy sandwiches. jim axelrod, vice president of marketing, would like to add a line of smoothies with a similar health emphasis. each smoothie would include two free health supplements such as vitamins, antioxidants, and protein. jim believes smoothie sales should fill the slow mid-afternoon period. adding the line of smoothies would require purchasing additional freezer space, machinery, and equipment. jim provides the following projections of net sales, net income, and average total assets in support of his proposal. sandwichesonly sandwiches and smoothies net sales $ 750,000 $ 1,350,000 net income 120,000 210,000 average total assets 350,000 750,000 return on assetschoose numerator ÷ choose denominator = return on assets÷ = return on assets÷ = profit margin÷ = profit margin÷ = asset turnover÷ = asset turnover÷ = times
Answers: 2
Business, 22.06.2019 17:30, dani4685
One of your new suppliers, kim, has been hearing rumors about your firm’s lack of capability to deliver high quality products and writes an email asking you to address the claims being made. in replying to her, you want to be sure that you are very clear and leave no room for misinterpretation. which of the following aspects of effective communication should you give the most attention? (a) making sure you understand kim’s areas of expertise. (b) supporting your reply with relevant data and facts. (c) establishing your credibility as an expert. (d) paying attention to implied communications.
Answers: 2
Do you know the correct answer?
Estimating WACC and Expected Growth in Dividends ModelAssume FedEx Corporation (NYSE: FDX) was tradi...
Questions in other subjects:
Physics, 05.11.2020 20:50
Chemistry, 05.11.2020 20:50
