# Cost of equity or the rate of return that VISA’s shareholder

In order to estimate the cost of equity for the company VISA, I need to obtain an estimate of the company’s ‘beta’ or systematic risk coefficient, on the annual rate of return on a risk-free investment, and on the expected rate of return on the ‘market portfolio’. You can easily find that information by going to the following web site: http://finance.yahoo.com and insert the name VISA. The beta of the company is reported on that web site. Click on the “key statistics” link on the left hand side of the screen to find the beta and other information.

First find out what is the present Yield to Maturity (YTM) on a US Government bond that matures in one year. That rate is the ‘risk-free rate’.

Next, it is customary to assume that the difference between the expected rate of return on the ‘market portfolio’ and the risk-free rate rate of return is about 7.0%. This is the expression [RM – RF] . So if for example the risk-free rate of interest is, say, 3% per year, than the expected rate of return on the ‘market portfolio’, RM, is 10%. So, multiply the ‘beta’ of VISA Company by 7.0%. That will be the equivalent of VISA’s βj [RM – RF] . Then add to that number the current yield to maturity on a US Government bond [see step (1) above].

The above procedure provides you with an estimate of the rate of return that the shareholders of VISA require on their investment. This rate is called the cost of equity of VISA.

After going through these calculations, PLEASE DESCRIBE IN DETAIL the following information:

1. Show your work you used to obtain the cost of equity for VISA company.
2. Is this cost of equity higher or lower than you expected? The average cost of capital for a firm in the S&P 500 is 10.2 percent. Would you think VISA should have a lower or a higher cost of capital than the average firm?
3. Look up the betas for some of the other companies compared to VISA Company. These are the companies that have a higher or lower discount rate than VISA Company. Using these betas, compute the cost of equity for these firms. How do they compare to VISA Company? Are you surprised that some firms have a higher or lower Cost of equity than VISA Company?
4. How would you go about finding the cost of equity using the dividend growth model or the arbitrage pricing theory for VISA? No calculations is actually needed to do this – just explain how you would go about doing these calculations and explain what kind of additional information you might need.

Calculate the price
Pages (550 words)
\$0.00
*Price with a welcome 15% discount applied.
Pro tip: If you want to save more money and pay the lowest price, you need to set a more extended deadline.
We know how difficult it is to be a student these days. That's why our prices are one of the most affordable on the market, and there are no hidden fees.

Instead, we offer bonuses, discounts, and free services to make your experience outstanding.
How it works
Receive a 100% original paper that will pass Turnitin from a top essay writing service
step 1
Fill out the order form and provide paper details. You can even attach screenshots or add additional instructions later. If something is not clear or missing, the writer will contact you for clarification.
Pro service tips
How to get the most out of your experience with AssignmentHelpWeb
One writer throughout the entire course
If you like the writer, you can hire them again. Just copy & paste their ID on the order form ("Preferred Writer's ID" field). This way, your vocabulary will be uniform, and the writer will be aware of your needs.
The same paper from different writers
You can order essay or any other work from two different writers to choose the best one or give another version to a friend. This can be done through the add-on "Same paper from another writer."
Copy of sources used by the writer
Our college essay writers work with ScienceDirect and other databases. They can send you articles or materials used in PDF or through screenshots. Just tick the "Copy of sources" field on the order form.
Testimonials
See why 20k+ students have chosen us as their sole writing assistance provider
Check out the latest reviews and opinions submitted by real customers worldwide and make an informed decision.
Architecture, Building and Planning
The assignment was well written and the paper was delivered on time. I really enjoyed your services.
Customer 452441, September 23rd, 2022
Psychology
Thanks a lot the paper was excellent
Customer 452453, October 26th, 2022
Excellent service - thank you!
Customer 452469, February 20th, 2023
Thank you!
Customer 452451, November 27th, 2022
Anthropology
excellent loved the services
Customer 452443, September 23rd, 2022
Job well done. Finish paper faster than expected. Thank you!
Customer 452451, October 3rd, 2022
Theology
Job well done and completed in a timely fashioned!
Customer 452451, November 18th, 2022
Excellent timely work
Customer 452451, April 19th, 2023
English 101
Very good job. I actually got an A
Customer 452443, September 25th, 2022
Nursing
The paper was EXCELLENT. Thank you
Customer 452449, September 23rd, 2022
Anthropology
Excellent services will definitely come back
Customer 452441, September 23rd, 2022
11,595
Customer reviews in total
96%
Current satisfaction rate
3 pages
Average paper length
37%
Customers referred by a friend