Estimating the Cost of Capital – savvyessaywriters.net | Savvy Essay Writers
Estimating the Cost of Capital – savvyessaywriters.net | Savvy Essay Writers
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Estimating the Cost of CapitalFind a firm of your interest. Make sure it has recent stock price/return informationFor the period of Jan 1st 2011 to Dec 31st 2020, get monthly return (including dividends) of the stock. (2’)For the same period of time, get corresponding monthly return for S&P500 (1’)For the same period of time, get corresponding 4-weeks (1-month) treasury bill rate (1’).Run CAPM regression.Note: you can use Excel to run the regression.Report:estimated intercept, estimated slope (beta) (2’)Calculate Jensen’s alpha (1’)Assess Cost of Equity (2’), please look up the current monthly risk-free rate (September 2021) and let’s assume the current expected market risk premium is 3.50%.Assuming the cost of debt of your company is 10%, and debt ratio is 40%, tax rate is 30%, what is the cost of the capital? (1’)