财务管理Exercises Exercises (Chapter 9&10) 1.Y ou are given the following information for Lorelei Motorwerke. long-term debt outstanding $300000 current yield to maturity 8% number of shares of common stock 10000 price per share $50 book value per share $25 expected rate of return on stock 15% (1)Calculate Lorelei’s company cost of capital. ignore taxes (2)How would expected rate of return on stock and cost of capital change if Lorelei’s stock price fell to $25 due to declining profits? Business risk is unchanged. 2.Equity beta of Burlington Northern is 0.64, standard error is 0.2. And the industry equity beta is 0.5, standard error is 0.17. (1)Calculate Burlington’s cost of equity from the CAPM using its own beta estimate and the industry beta estimate. How different are your answers? Assume a risk-free rate of 3.5 percent and a market risk premium of 8 percent. (2)Can you be confident that Burlington’s true beta is not the industry average? (3)Under what circumstances might you advise Burlington to calculate its cost of equity on its own beta estimate? (4)Burlington’s cost of debt was 6 percent and its debt-to-value ratio was 0.4. What was Burlington’s company cost of capital? Use the industry average beta. 3.Amalgamated Products has three capital for each division, Amalgamated has identified the following three principal competitors: division percentage of firm value food 50 electronic 30 chemicals 20 To estimate the cost of capital for each division, Amalgamated has identified the following three principal competitors: beta equity debt/value United foods 0.8 0.3 General Electronics 1.6 0.2 Associated Chemicals 1.2 0.4 Assume these beta are accurate estimates and that the CAPM is correct. (1)assuming that the debt of these firms is risk-free, estimate the asset beta for each of Amalgamated’s divisions (2)Amalgamated’s ratio of debt to value is 0.4. if your estimates of divisional betas are right, what is Amalgamated’s equity beta? (3)Assume that the risk free interest rate is 7 percent and that the expected return on the market index is 15 percent. Estimate the cost of capital for each of Amalgamated ’s divisions. (4) how much would your estimates of each division ’s cost of capital change if you assumed that debt has a beta of 0.2? 4. Otobai cash flow as follows, 本文来源：https://www.wddqw.com/doc/dcf98f207a563c1ec5da50e2524de518964bd33d.html