Theory Z was developed by

Schwimmer Corp. has a beta of 1.5. The prevailing risk-free rate is 5 percent and the annual market return in recent years has b

Gennadij [26K]

Answer:

Here the required rate of return is 14%.

Explanation:

Required rate of return can be defined as the minimum rate of return that an investor will accept for holding a company's stock, as a compensation for the risk which is associated with that stock. This concept is also used in corporate finance , where with the help of this profitability of an investment project is analyzed.

Formula for taking out required rate of return is -

Required rate of return = Risk free rate + Beta ( Market return - Risk free rate )

= 5% + 1.5 ( 11% - 5% )

= 5% + 1.5 ( 6%)

= 5% + 9%

= 14%

7 0

4 years ago

Read 2 more answers

Solano Company has sales of $580,000, cost of goods sold of $410,000, other operating expenses of $54,000, average invested asse

Anon25 [30]

Answer:

1.

ROI=6.44%

Investment Turnover=0.32

Profit Margin=20%

Residual Income (RI) = -$46,000

2.

a) ROI =9.28%, RI= $5,000

b) ROI=7.19%, RI= -$32,500

c) ROI=6.15%, RI= -$51,400

d) ROI=5.4%, RI= -$76,600

e) ROI=6.44%, RI= -$154,000

Explanation:

1. ROI is calculated as (Operating profit/Average net asset/Investment)*100.

Investment turnover is calculated as Net sales/Average net asset/Investment.

Profit Margin is calculated as Operating profit/Total sales.

Residual Income is calculated as Operating profit-(Average net asset/Investment * Hurdle rate).

Note: Operating profit= Sales-(Cost of goods sold+Operating expenses)

2.

a) 30% increase in sales & cost of goods sold will increase the ROI & Residual income.

b) Decrease in operating expense will increase the operating income, thereby increasing the ROI & RI.

c) Increase in operating expense by 10% will reduce the operating income, thereby decreasing the ROI & RI.

d) Increase in average invested assets by $340,000 will reduce the ROI & RI.

e) Change in hurdle rate will not change the ROI; however, it will decrease the residual income (RI).

6 0

4 years ago

Bricker Enterprises purchased a machine for $100,000 on October 1, 2018. The estimated service life is ten years with a $10,000

lutik1710 [3]

Answer:

$2,250

Explanation:

Given;

Cost of machine = $100,000

Residual value = $10,000

Useful life = 10 years

Annual depreciation = (Cost - Residual value ) ÷ useful life

= ($100,000 - $10,000 ) ÷ 10

= $90,000 ÷ 10

= $9,000 per year

Duration from October 1, 2018 to December 31, 2018 in year = $\frac{3}{12}$ years

= 0.25 year

therefore,

Depreciation expense for the year ended December 31, 2018

= Annual depreciation × Duration

= $9,000 × 0.25

= $2,250

3 0

3 years ago

Kari, a real estate agent, assures linc that a certain parcel of commercial property fronts on the most highly trafficked street

GarryVolchara [31]

Lin most likely a victim of fraud. Fraud is the intentional taking something from another individual for personal or financial gain which would make the other party at disadvantage. Committing fraud is a criminal offense and the victim could make legal actions to chase the criminal.

3 0

3 years ago

Some business insurance policies cover "business interruption." If your business makes $300,000 per year and a flood prevents op

Yuki888 [10]

Answer:

D): $17,308

Explanation: 300,000/365 = 822. 822 * 21 = 17300

8 0

3 years ago