The total market value of the common stock of the Okefenokee Real Estate Company is...
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Accounting
The total market value of the common stock of the Okefenokee Real Estate Company is $12.5 million, and the total value of its debt is $7.8 million. The treasurer estimates that the beta of the stock is currently 1.9 and that the expected risk premium on the market is 6%. The Treasury bill rate is 5%. Assume or simplicity at Oke enok det is ris e and the company does not a a. What is the required return on Okefenokee stock? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Required return b. Estimate the company cost of capital. (Do not round Intermedlate calculations. Enter your answer as a percent rounded to 2 declmal places.) Cost of capital c. What Is the discount rate for an expanslon of the company's present business? (Do not round Intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Discount rate d. Suppose the company wants to diversify into the manufacture of rose-colored spectacles. The beta of unleveraged optical manufacturers is 1.10. Estirnate the required retur on Okefenokee's new venture. (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.) Required return
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