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Departments in New York University
ECON-UB
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Popular Documents from New York University
riskret.pdf-THE INVESTMENT PRINCIPLE: RISK AND RETURN
Midterm 1 Statistics for Business Professor Avi Giloni 1. (34 points) Consider the following game. You pay $5 each me you play a game. To play, you toss a fair die and you are given the amount of money equivalent to the face of the die. If you roll
Cost of Capital = Cost of Equity (Equity/(Debt + Equity)) + After-tax Cost of Debt (Debt/(Debt + Equity)) Cost of Equity Levered Beta Riskfree Rate + Beta * Risk Premium After-tax Cost of Debt Borrowing Rate * (1- tax rate) Borrowing Rate = Riskfree
19 Disney ’ s cost of capital schedule… Aswath Damodaran 20 Disney: Cost of Capital Chart Aswath Damodaran 21 Disney: Cost of Capital Chart: 1997 Aswath Damodaran 21 10.50% 11.00% 11.50% 12.00% 12.50% 13.00% 13.50% 14.00% 0.00% 10.00% 20.00% 30.00% 4
Measuring Investment Returns: Solutions Problem 1 Year Beginning BV Depreciation Ending BV Average BV Revenues COGS EBIT EBIT (1-t) 1 25 3 22 23.5 20.00 $ 10.00 $ 7.00 $ 4.20 $ 2 22 3 19 20.5 22.00 $ 11.00 $ 8.00 $ 4.80 $ 3 19 3 16 17.5 24.20 $ 12.10