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Q. Medical Associates Medical Associates is a large for-profit group practice. Its dividends are expected to grow at a constant rate of 7% per year into the foreseeable future. The organization's last dividend (D0) was $2, also its current stock price is $23. The organization's beta coefficient is 1.6; the rate of return on 20-year T-bonds currently is 9%; the expected rate of return is 13%. The organization's target capital structure calls for 50% debt financing, the interest rate required on the business's new debt is 10%, also its tax rate is 40%. You are to write a 3-6 page report which answers the subsequent: 1. Calculate Medical Associates' cost of equity estimate using the DCF method. 2. Calculate the cost of equity estimate using CAPM. 3. On the basis of your answers to #1 & #2, illustrate what is your final estimate for the organization's cost of equity? 4. Calculate the organization's estimate for corporate cost of capital. 5. Describe the four (4) steps of capital budgeting analysis. 6. Describe Explain how is project risk is incorporated into a capital budgeting analysis.

Business Management, Management Studies

  • Category:- Business Management
  • Reference No.:- M9366210

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