Risk-free Interest Rate Bussiness Assignment Help
In 2022 there is about 4.9% growth across the world which is a deviation of 1.1% from 2021. Therefore, there are different things that should be done to increase the global economy, for example, developing institutions and broadening the economy. this is a clear indication of why business studies are taught in schools. However, it is challenging for many. Get help from our experts by contacting my homework writers. this is an example of a common question examined.
XYZ Corp. has no debt. Its assets will be worth 600 million in one year if the economy does well but only 300 million in one year if the economy does poorly. 20pts 2 Both events will occur with equal probability. The market value today of its assets is 400 million.
a) What is the expected return of XYZ stock without leverage?:
b) Suppose the risk-free interest rate is 5%. If XYZ borrows 100 million today at this rate and uses the proceeds to pay an immediate cash dividend, what will be the market value of its equity just after the 7 dividend is paid, according to MM?
c) What is the expected return of XYZ stock after the dividend is paid in part (b)?
Business studies are studied across the world in various institutions at different levels, and thus some specialize in the subject at a higher level. Get assignment help by contacting myhomework writers for the best services at a low price.
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