Homework Help is Here – Start Your Trial Now!
Business
Accounting
1. Below are the most recent financial statements information for M. Inc. (in million $). Dec.31.202 Dec.31.2021 0 Financial assets 130,334 136,527 Operating assets 203,445 164,784 Financial Liabilities 67,775 70,998 Operating liabilities 124,016 112,009 Common stockholders' equity 141,988 118,304 Total shares outstanding 7,519 7,571 Dec.31.202 Dec.31.2021 0 Financial Income after tax 2,790 2,108 Financial Expense after tax 1,853 2,047 Net Financial Income 937 61 The stock price of M. was around $340 at the end of fiscal year 2021. The firm beta is 0.94. Around December 31, 2021, the 10-year US government bond yield is about 1.5%. The market risk premium of US is estimated to be about 3.3%. 1) What is the cost of equity for M. at the end of fiscal year 2021? 2) What is the cost of operations for M. at the end of fiscal year 2021? 3) Compare the above two cost of capital and explain why they are different

1. Below are the most recent financial statements information for M. Inc. (in million $). Dec.31.202 Dec.31.2021 0 Financial assets 130,334 136,527 Operating assets 203,445 164,784 Financial Liabilities 67,775 70,998 Operating liabilities 124,016 112,009 Common stockholders' equity 141,988 118,304 Total shares outstanding 7,519 7,571 Dec.31.202 Dec.31.2021 0 Financial Income after tax 2,790 2,108 Financial Expense after tax 1,853 2,047 Net Financial Income 937 61 The stock price of M. was around $340 at the end of fiscal year 2021. The firm beta is 0.94. Around December 31, 2021, the 10-year US government bond yield is about 1.5%. The market risk premium of US is estimated to be about 3.3%. 1) What is the cost of equity for M. at the end of fiscal year 2021? 2) What is the cost of operations for M. at the end of fiscal year 2021? 3) Compare the above two cost of capital and explain why they are different

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
See similar textbooks
icon
Related questions
Question
None
1. Below are the most recent financial statements information for M. Inc. (in million $). Dec.31.202 Dec.31.2021 0 Financial assets 130,334 136,527 Operating assets 203,445 164,784 Financial Liabilities 67,775 70,998 Operating liabilities 124,016 112,009 Common stockholders' equity 141,988 118,304 Total shares outstanding 7,519 7,571 Dec.31.202 Dec.31.2021 0 Financial Income after tax 2,790 2,108 Financial Expense after tax 1,853 2,047 Net Financial Income 937 61 The stock price of M. was around $340 at the end of fiscal year 2021. The firm beta is 0.94. Around December 31, 2021, the 10-year US government bond yield is about 1.5%. The market risk premium of US is estimated to be about 3.3%. 1) What is the cost of equity for M. at the end of fiscal year 2021? 2) What is the cost of operations for M. at the end of fiscal year 2021? 3) Compare the above two cost of capital and explain why they are different
Transcribed Image Text:1. Below are the most recent financial statements information for M. Inc. (in million $). Dec.31.202 Dec.31.2021 0 Financial assets 130,334 136,527 Operating assets 203,445 164,784 Financial Liabilities 67,775 70,998 Operating liabilities 124,016 112,009 Common stockholders' equity 141,988 118,304 Total shares outstanding 7,519 7,571 Dec.31.202 Dec.31.2021 0 Financial Income after tax 2,790 2,108 Financial Expense after tax 1,853 2,047 Net Financial Income 937 61 The stock price of M. was around $340 at the end of fiscal year 2021. The firm beta is 0.94. Around December 31, 2021, the 10-year US government bond yield is about 1.5%. The market risk premium of US is estimated to be about 3.3%. 1) What is the cost of equity for M. at the end of fiscal year 2021? 2) What is the cost of operations for M. at the end of fiscal year 2021? 3) Compare the above two cost of capital and explain why they are different
Expert Solution
trending now

Trending now

This is a popular solution!

steps

Step by step

Solved in 2 steps

SEE SOLUTIONCheck out a sample Q&A here
Blurred answer
Recommended textbooks for you
FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
Accounting
ISBN:
9781259964947
Author:
Libby
Publisher:
MCG
Accounting
Accounting
Accounting
ISBN:
9781337272094
Author:
WARREN, Carl S., Reeve, James M., Duchac, Jonathan E.
Publisher:
Cengage Learning,
Accounting Information Systems
Accounting Information Systems
Accounting
ISBN:
9781337619202
Author:
Hall, James A.
Publisher:
Cengage Learning,
Horngren's Cost Accounting: A Managerial Emphasis…
Horngren's Cost Accounting: A Managerial Emphasis…
Accounting
ISBN:
9780134475585
Author:
Srikant M. Datar, Madhav V. Rajan
Publisher:
PEARSON
Intermediate Accounting
Intermediate Accounting
Accounting
ISBN:
9781259722660
Author:
J. David Spiceland, Mark W. Nelson, Wayne M Thomas
Publisher:
McGraw-Hill Education
Financial and Managerial Accounting
Financial and Managerial Accounting
Accounting
ISBN:
9781259726705
Author:
John J Wild, Ken W. Shaw, Barbara Chiappetta Fundamental Accounting Principles
Publisher:
McGraw-Hill Education
SEE MORE TEXTBOOKS