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You are the Genesis accountant and have taken a class recently in the financing. You agree to make a PowerPoint presentation of approximately 6 to 8 minutes by using the exs and information given below:

1. Debt: Jones Industries borrows $600,000 for 10 years with a yearly payment of $100,000. What is expected interest rate (cost of debt)?

2. Internal common stock: Jones Industries has a beta of 1.39. The risk free rate as measured by rate on short-term US Treasury bill is 3 percent, and the anticipated return on the whole 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

Build up a 10–12-slide presentation in PowerPoint format. Perform your computation in an Excel spreadsheet. Cut and paste the computation in your presentation. comprise speaker’s notes to elucidate each point in detail.

Basic Finance, Finance

  • Category:- Basic Finance
  • Reference No.:- M91199

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