An average of which of the following will give a fairly accurate estimate of wha

Question

An average of which of the following will give a fairly accurate estimate of what a project's beta will be? flotation beta Proxy beta pure-play proxies weighted average beta Rose has preferred stock selling for 99 percent of par that pays a 9 percent annual coupon, what would be Rose's component cost of preferred stock? 4.55% 8.91% 9.00% 9.09% When calculating the weighted average cost of capital, weights are based on book values book weights. market values. market betas. Use the P1 decision rule to evaluate these projects; which one(s) should be accepted or rejected? accept both A and B accept neither A nor B accept A, reject B reject A, accept B Suppose your firm is considering two mutually exclusive, required projects with the cash flows shown below. The required rate of return on projects of both of their risk class is 8 percent, and the maximum allowable payback and discounted payback statistic for the projects are 2 and 3 years, respectively.

Explanation / Answer

Ans 18: ans is 2) Proxy beta: because when a firm do not have any beta they probable consider the beta of comparable firms and then make some necessary adjustment through Proxy discount rate and hence they provide the pretty much accurate estimate of project beta.

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