1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
ExtremeBDS [4]
1 year ago
12

Scanlon Inc.'s CFO hired you as a consultant to help her estimate the cost of capital. You have been provided with the following

data: rRF = 4.10%; RPM = 5.25%; and b = 0.70. Based on the CAPM approach, what is the cost of equity from retained earnings?
a.9.25%
b.7.78%
c.7.08%
d.7.00%
e.8.47%
Business
1 answer:
VARVARA [1.3K]1 year ago
8 0

Option b. 7.78% is the correct answer. The cost of equity from retained earnings is 7.78% as per the CAPM approach

The relationship between systematic risk, or the general dangers of investing, and expected return for assets, particularly stocks, is described by the Capital Asset Pricing Model (CAPM).

A linear relationship between the required return on investment and risk is established by this financial model.

Retained earnings refer to the total earnings that a company has generated from its operations minus the dividends distributed among shareholders. The retained earnings are earnings reinvested in the business.

The calculation is shown below.

Cost of equity = Risk-free rate + (beta * Market risk premium)

Cost of equity = 4.10% + (0.70 * 5.25%)

Cost of equity = 4.10% + 3.675%

Cost of equity = 7.77% or 7.78%

Learn more about retained earnings:

brainly.com/question/14529006

#SPJ4

You might be interested in
If employees are bonded Group of answer choices they have worked for the company for at least 10 years. it means that they are n
Solnce55 [7]

Answer:  The correct answer is :  they have been insured against misappropriation of assets.

Explanation:  The employee relationship is an agreement, of fidelity, in which the insurance company guarantees the payment of a defined sum in the event that the employee who is covered by the insurance, causes financial losses to the employer.

6 0
3 years ago
Lee, Inc. acquired 30% of Polk Corp.'s voting stock on January 1, Year 1 for $100,000. During Year 1, Polk earned $40,000 and pa
KiRa [710]

Answer:

$7,500

Explanation:

Lee, Inc. acquired 30% of Polk Corp.'s voting stock on January 1, Year 1 for $100,000.

During Year 1, Polk earned $40,000 and paid dividends of $25,000.

Therefore Lee's dividend income = 0.3 x 25,000 = $7,500

Before income taxes, the amount that Lee should include in its Year 1 Income Statement as a result of the investment will be the dividend earned in year 1 which is $7,500

5 0
3 years ago
Economics is primarily the study of__________.
Julli [10]

Answer:

Option (c) is correct.

Explanation:

Economics is the study of the choices that we have to make from the limited available resources. We know that the human wants are unlimited and the resources to satisfy these wants are limited. So, we have to use these scarce resources in a manner which gives the maximum utility from the resources. The scarce resources have to be rationally managed.

7 0
3 years ago
You are planning to save for retirement over the next 25 years. To do this, you will invest $820 per month in a stock account an
alina1380 [7]

Answer:

The withdraw amount is "11,227.42".

Explanation:

The given values are:

In stock account,

PMT = $820

Interest rate = \frac{10.2 \ percent}{12}

N = 300

PV = 0

In Bond account,

PMT = $420

Interest rate = \frac{6.2 \ percent}{12}

N = 300

PV = 0

Now,

By using the FV (Future value) function, the value in Stock account will be:

= FV(rate,nper,pmt,[pv],[type])

= 1,125,795.30

By using the FV (Future value) function, the value in Stock account will be:

= FV(rate,nper,pmt,[pv],[type])

= 300,181.3321

After 25 years,

The value throughout the account, will be:

= 300,181.3321 + 1,125,795.30

= 1,425,976.63

By using the PMT function, we can find the with drawling amount. The amount will be:

= PMT(rate, nper, pv, [fv], [type])

= 11,227.42

4 0
2 years ago
Always pay attention to your_______ markings and make every attempt to keep all of your wheels on the road surface.
steposvetlana [31]

Always pay attention to your lane markings and make every attempt to keep all of your wheels on the road surface. Road surface marking is any device or material that is used on a road surface to convey official information.

It is usually used in conjunction with road and marking machines (also referred to as road marking equipment or pavement marking equipment). They can also be used to identify parking places or designate areas for various purposes in other facilities where automobiles are present.

Road and markings are conceived of as horizontal traffic signs in various countries and territories (France, Italy, Czechia, Slovakia, and so on), as opposed to vertical traffic signs placed on posts.

To learn more about marking, click here.

brainly.com/question/3016269

#SPJ4

8 0
1 year ago
Other questions:
  • All else equal, a firm would prefer to have a higher gross margin. <br> a. True <br> b. False
    12·1 answer
  • ABC Credit Union has a Commercial Crime policy that includes Computer Fraud coverage. After an employee was tricked into making
    9·1 answer
  • Haskins Products sells 2,000 kayaks per year at a sales price of $470 per unit. Haskins sells in a highly competitive market and
    10·1 answer
  • At the end of the year, Mercy Cosmetics’ balance of Allowance for Uncollectible Accounts is $830 (debit) before adjustment. The
    13·1 answer
  • The questions of economics address which of the following? Chec
    13·1 answer
  • What is a secured loan
    10·2 answers
  • Which of the following best describes marketing mix? It is the blend of marketing strategies for product, price, distribution, a
    14·1 answer
  • Travis International has a one-time expense of $1.13 million that must be paid two years from today. The firm can earn 4.3 perce
    5·1 answer
  • Whos the richeist family
    7·1 answer
  • Rugged Bicycles, Inc. collects 25% of its sales on account in the month of the sale and 75% in the month following the sale. If
    14·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!