Answer:
average beta of the new stocks to achieve the target required rate of return is 2.29
Explanation:
given data
Portfolio amount invested = $40,000,000
Beta = 1
Risk free rate = 4.25%
Market risk premium = 6%
Hazel expects = $60 million
expected return new investments = 13.00%
to find out
average beta of new stocks be to achieve the target required rate of return
solution
we will use here CAPM formula that is
Expected return = Risk free rate + Beta × Market risk premium .........1
put here value we get
13% = 4.25% + Beta × 6%
0.06 × Beta = 13% - 4.25%
Beta = 1.458
now we get Weighted beta that is express as
Weighted beta = weight of old stock in new portfolio × 1 + Weight of new stock in new portfolio × beta of new stock ..................2
put here value we get
1.458 = 
solve it we get
beta = 2.29
so that average beta of the new stocks to achieve the target required rate of return is 2.29
Pay the Premium in full and on time.
Explanation:
A No-lapse guarantee offers an insurance company commitment that a fixed life insurance policy is in place – even though, as long as the agreed retention premium is calculated at the required time, the cash value in the policies drops to zero or less than zero.
The No-Lapse insurance fee is the amount to be paid in order for the policy to remain in force unless the policy is carried out effectively for a certain number of years. The coverage will continue during the lapse period, even when the cash value drops to zero. The insurer provides the guarantee.
When the fee is not collected on the due date, it shall be deemed to have been default and the policyholder may forfeit his advantages. During that time, the fee can be charged without additional charges and the scheme remains in effect.
Answer:
Correct option is (c)
Explanation:
An accountant will record only those cost in the financial statements that have incurred on account of carrying out the business.
In this case, option (a) and (b) are opportunity cost of carrying out shoe shine business. These are the income that John could have earned if he did not start shoe-shine business.
Cost of shoe polish is an operating expense incurred to run his shoe-shine business. So this cost will be included by the accountant in the financial statements.
Answer:
$11.59 million
Explanation:
The computation of earning before interest and tax is shown below:-
Free cash flow = Operating cash flow - Investment in operating cash flow
$8.17 million = Operating cash flow - $2.17 million
Operating cash flow = $10.34 million
For calculating the earning before interest
Operating cash flow = Earning before interest - Taxes + Depreciation
$10.34 million = Earning before interest - $2.17 million + $0.92 million
= $10.34 million = Earning before interest - $1.25 million
Earning before interest = $11.59 million
