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maxonik [38]
1 year ago
10

compute the expected return given these three economic states, their likelihoods, and the potential returns: fast growth state h

as a probability of 0.3 and 40% return. slow growth state has a probability of 0.4 and 15% return. recession state has a probability of 0.3 and -15% return. group of answer choices
Business
1 answer:
Bas_tet [7]1 year ago
3 0

The expected return given these three economic states is 11.73%

What is the expected return based on the probabilities?

The expected return  based on the potential return and probabilities is the sum of the returns in different states multiplied by their probabilities as indicated below:

expected return=(return of fast growth rate*its prob)+(retrurn of slow growth rate*its prob)+(recession state rate*its prob)

expected return=(40%*0.3)+(15%*0.4)(-15%*0.3)

expected return=11.73%

In other words, the expected return is weighted average of possible returns alongside their probabilities

Find out more about expected return on:brainly.com/question/19424971

#SPJ1

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Molly Jasper and her sister, Caitlin Peters, got into the novelties business almost by accident. Molly, a talented sculptor, oft
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a. The computation of Mollycaits' operating break-even point is <em>2,473 units</em> ($4,500/$1.82).

b. The calculation of Mollycaits' EBIT on the department store order is <em>$812.40</em> ($9,500 - $8,688).

c. If department stores' price were $9.51, the EBIT will be <em>$5,387</em> ($14,075 - $8,688).

Note that for (b) and (c), the fixed cost is not considered.

d. Without paying more than $7.69, the quantity that will result in an EBIT of $3,700 is <em>4,505 units</em> ($4,500 + $3,700)/$1.82

e.  Varieties of Mollycaits = 15 with variable cost of $5.87

f. The recommendation to Molly and Caitlin with regard to pricing and varieties to offer is that, while the company can varieties to suit the needs of customers, it must ensure that it does not price them below $5.87, its operating cost.

Data and Calculations:

<u>Special contract</u>:

Units of figurines offered = 1,480

Sales value of offer = $9,500

Selling price per unit = $6.42 ($9,500/1,480)

Variable operating cost = $5.87

Contribution margin per unit = $0.55 ($6.42 - $5.97)

<u>Normal business</u>:

Estimated average price per unit = $7.69

Variable operating cost = $5.87

Contribution margin per unit based on average price = $1.82 ($7.69 - $5.87)

Fixed cost per month = $4,500

Thus, Molly and Caitlin can offer various types of figurine, but they must sell at least 2,473 units to break-even.

Learn more about computing break-even points here: brainly.com/question/9212451

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