Assignment 2: Cost of Debt and Equity A+ rated

 

The manager of Sensible Essentials conducted an excellent seminar explaining debt and equity financing and how firms should analyze their cost of capital. Nevertheless, the guidelines failed to fully demonstrate the essence of the cost of debt and equity, which is the required rate of return expected by suppliers of funds.

You are the Genesis accountant and have taken a class recently in financing. You agree to prepare a PowerPoint presentation of approximately 6–8 minutes using the examples and information below:

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)?

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

Develop a 10–12-slide presentation in PowerPoint format. Perform your calculations in an Excel spreadsheet. Cut and paste the calculation into your presentation. Include speaker’s notes to explain each point in detail. Apply APA standards to citation of sources. Use the following file naming convention: LastnameFirstInitial_M4_A2.ppt

Answers

Related Questions

Theory of Peoples “Challenges”...

Theory of Peoples “Challenges” Could you please elaborate on the theory of peoples “challenges” regarding loss of”positions being challenged...

Management of Individual Behavior...

Management of Individual Behavior How can your personality type affect your career and effectiveness on the job? This solution explores normal means o...

American Disability Act...

American Disability Act An accounting firm has just contacted your consulting business for assistance. They want to hire someone to do accounting and...

Recruitment Methods & Job Descriptions...

Recruitment Methods & Job Descriptions The solution addresses:Examine two ways that companies can recruit qualified job applicants. Determine which me...

Influence of Internal and External Environmental F...

Influence of Internal and External Environmental Factors on HR Strategies Discuss how internal and external environmental factors impact HR strategies...

Human Resources Responsibilities: Pay & Benefits...

Human Resources Responsibilities: Pay & Benefits Discuss the responsibility of Human Resources (HR) with regard to planning and administering pay and...

Human Capital and Human Resources Management...

Human Capital and Human Resources Management Employees are valuable assets to an organization. How can human resource management support the organizat...

HR Perspective: How to Increase Job Satisfaction...

HR Perspective: How to Increase Job Satisfaction As human resource staff, what advice do you offer a supervisor/manager to increase job satisfaction?T...

Sample Total Compensation Package for: HR Recruiti...

Sample Total Compensation Package for: HR Recruiting Manager The case study scenario: Creat a compensation package for an Human Resource Recruiting Ma...

Alignment Of HRM And Business Strategies...

Alignment Of HRM And Business Strategies Select a publicly traded company and evaluate its Human Resource (HR) and business strategy, HR department jo...

Growing Your Staff...

Growing Your Staff As a human resource consultant, identify the organization’s operational gap or need for the human resource management services. D...

Human Resource Management Critical Thinking...

Human Resource Management Critical Thinking The local textile plant has a workforce of 55 full-time hourly workers, 12 part-time workers (less than 15...

Entrepreneurship and financial resources...

Entrepreneurship and financial resources What steps should an entrepreneur take to obtain and maintain adequate financial resources? What is most impo...

Human Resources: Pay Strategy, Appraisal, Benefits...

Human Resources: Pay Strategy, Appraisal, Benefits 24. A pay strategy that has the potential to sustain a competitive advantage:a. will be difficult...

Health Insurance Portability and Accountability Ac...

Health Insurance Portability and Accountability Act of 1996 Delve into one of the legislation issues listed below regarding compensation issues: –...

Recruiting Strategies...

Recruiting Strategies Help develop recruiting strategies and on-boarding process for a Vice President of Recruiting and Account Management in a smalle...

Human Resource Case Analysis...

Human Resource Case Analysis You are the Vice President of Human Resources at Community State University. The President of the University has just inf...

Human Resource Planning and Recuitment...

Human Resource Planning and Recuitment Human Resource Planning and Recuitment Chapter 5 Bernardin, H. (2007). Human Resource Management: An Experie...

Analysis of Human Resource Challenges...

Analysis of Human Resource Challenges Please read and explain the following journal articles and HRM challenges. Based on information in the articles,...

Human Resource Sourcing Method...

Human Resource Sourcing Method Submit the Sourcing Methods portion of your selection and onboarding process project.: -Evaluate and select effective s...

HR Issue Description...

HR Issue Description Develop an innovative human resources policy that limits a company’s liability and promotes its core mission and values. ( can...

Process Flowcharts: Graphical and Fishbone Flowcha...

Process Flowcharts: Graphical and Fishbone Flowcharts I need help. I am trying to put together 2 flowscharts. One graphical and one Fishbone flowcha...

HR Management Case Scenario: Fair Labor Standards...

HR Management Case Scenario: Fair Labor Standards Act (FLSA) Research and identify the salient features of the Fair Labor Standards Act (FLSA). Provid...

Video Resumes...

Video Resumes Would you be more or less attracted to an organization that required a video resumè? Explain your answer.I would be more interested in...

If you didn't find the right answer

Ask Your Questions, We'll notify you once someone answers it