{"id":47742,"date":"2022-04-01T21:33:26","date_gmt":"2022-04-01T21:33:26","guid":{"rendered":"https:\/\/assignmenttutors.net\/blog\/summit-systems-has-an-equity-cost-of-capital-of-11-will-pay-a\/"},"modified":"2022-04-01T21:33:26","modified_gmt":"2022-04-01T21:33:26","slug":"summit-systems-has-an-equity-cost-of-capital-of-11-will-pay-a","status":"publish","type":"post","link":"https:\/\/assignmenttutors.net\/blog\/summit-systems-has-an-equity-cost-of-capital-of-11-will-pay-a\/","title":{"rendered":"Summit systems has an equity cost of capital of 11%, will pay a"},"content":{"rendered":"<div>\n<p><span>Q.1 Summit Systems has an equity cost of capital of 11%, will pay a dividend of $1.50 in one year\u00a0<\/span><br \/><span>&amp; its dividends had been expected to grow by 6% per year. You read in the paper that Summit has\u00a0<\/span><br \/><span>revised its growth prospects &amp; now expects its dividends to grow at a rate of 3% per year for ever.\u00a0<\/span><\/p>\n<p><span>Required:\u00a0<\/span><br \/><span>a) What is the drop in the value of a Summit System\u2019s share based on this information?\u00a0<\/span><br \/><span>b) If you tried to sell your Summit Systems shares after reading the news, what price would you\u00a0<\/span><br \/><span>be likely to get? Why?<\/span><\/p>\n<p>Q.2 The mortgage on your house is five years old. It required monthly payments of $1402, had\u00a0<br \/>an original term of 30 years &amp; had an interest rate of 10%. In the intervening five years, interest\u00a0<br \/>rates have fallen &amp; so you have decided to refinance- that is, you will roll over the outstanding\u00a0<br \/>balance into a new mortgage. The new mortgage has a 30-year term, requires monthly payments &amp;\u00a0<br \/>and has an interest rate of 6.625%<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>\u00a0<\/p>\n<p>Required:\u00a0<br \/>a) What monthly repayments will be required with the new loan?\u00a0<br \/>b) If you still want to pay off the mortgage in 25 years, what monthly payments should you\u00a0<br \/>make after you refinance?<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"<p>Q.1 Summit Systems has an equity cost of capital of 11%, will pay a dividend of $1.50 in one year\u00a0&amp; its dividends had been expected to grow by 6% per year. You read in the paper that Summit has\u00a0revised its growth prospects &amp; now expects its dividends to grow at a rate of 3% per [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[16],"tags":[],"class_list":["post-47742","post","type-post","status-publish","format-standard","hentry","category-education"],"_links":{"self":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/47742","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/comments?post=47742"}],"version-history":[{"count":0,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/posts\/47742\/revisions"}],"wp:attachment":[{"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/media?parent=47742"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/categories?post=47742"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/assignmenttutors.net\/blog\/wp-json\/wp\/v2\/tags?post=47742"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}