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hjlf
2 years ago
15

Vera Paper's stock has a beta of 1.40, and its required return is 12.00%. Dell Dairy's stock has a beta of 0.80. If the

Business
1 answer:
jeka57 [31]2 years ago
3 0

The required rate of return on the stock of Dell company is come out to be 8.89%.

<h3>What is a stock?</h3>

Stock represents the number of shares being owned by an investor in the company on which it gets the dividends.

Given values for step 1:

The required rate of return: 12%

Beta factor: 1.40

Risk-free rate: 4.75%

<u>Step-1</u> Computation of market risk premium:

\rm\ Market \rm\ risk \rm\ premium=\frac{\rm\ Required \rm\ rate \rm\ of \rm\ return-\rm\ Risk \rm\ free \rm\ rate}{\rm\ Beta \rm\ factor} \\\rm\ Market \rm\ risk \rm\ premium=\frac{\$12\%-4.75\%}{1.40} \\\rm\ Market \rm\ risk \rm\ premium=5.18\%

Given values for step 2:

Market risk premium: 5.18%

Beta factor: 0.80

Risk-free rate: 4.75%

<u>Step-2</u> Computation of required rate of return:

\rm\ Required  \rm\ rate  \rm\ of  \rm\ return = \rm\ Risk  \rm\ free  \rm\ rate + ( \rm\ Market \rm\ risk \rm\ premium \times\ Beta factor) \\ \rm\ Required  \rm\ rate  \rm\ of  \rm\ return=4.75\% + ( 5.18\% \times\ 0.80)\\ \rm\ Required  \rm\ rate  \rm\ of  \rm\ return=8.89\%

Therefore, the return of 8.89% comes out to be the required rate of return for the stock of Dell Company.

Learn more about the required rate of return in the related link:

brainly.com/question/14667431

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Answer:

Option (a) is correct.

Explanation:

Given that,

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5 0
3 years ago
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A presentation.

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Presentation is used to engage the audience about new projects and strategies that should be carried out to ensure the overall growth of the business.

In the scenario above, Abril needs to use a presentation to communicate to her team the strategies she wants to employ inorder to increase productivity.

6 0
4 years ago
What are the documents required by the department of trade and industry when registering a private company
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If this is in relation to South Africa then my answer is: 

THREE DOCUMENTS REQUIRED BY THE DTI South Africa.
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Attach the following requirements:
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3 years ago
If your firm buys $1,000 worth of supplies on credit with terms 3/15 n60 and pays the bill on the 60thday after the purchase:
Agata [3.3K]

Answer:

Nominal Cost of Trade Credit = 25.09%

Exact Cost of Trade Credit  = 28.03%

Explanation:

given data

buys worth =  $1,000

terms = 3/15 n60

pays the bill = 60th day

to find out

Nominal Cost of Trade Credit and Exact Cost of Trade Credit

solution

we know here Discount % and time 60 day and discount period that is

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and Discount Period = 15 days

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put here value we get

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and

Exact Cost of Trade Credit will be here as

Exact Cost of Trade Credit = (1+Discount % ÷ (100%-Discount %))^(365/(time for Payment - Discount Period) - 1    ..................2

put here value we get

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Answer:

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