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Vaselesa [24]
9 months ago
10

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:
topjm [15]9 months ago
7 0

The cost of equity from retained earnings when using the CAPM approach for Scanlon Inc., would be 7 . 80%

<h3>How to find the cost of equity ?</h3>

The CAPM method stands for the Capital Asset Pricing Method and it allows for the cost of equity to be calculated by using the beta, the real risk free rate, and the market risk premum.

The cost of equity when using the CAPM method can be found by the formula:
Cost of equity = Real risk free rate + Beta x Market premium

The real risk free rate = 4 . 10 %

Beta = 0 . 70

Market risk premium = 5 . 25 %

The cost of equity is therefore:

Cost of equity = 4 . 10 % +  0 . 70 x 5 . 25 %

Cost of equity = 4 . 10 % + 3.675 %

Cost of equity = 7. 775 %

Cost of equity = 7 . 80%

Find out more on the CAPM method at brainly.com/question/24158909

#SPJ1

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Explanation:

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6 0
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A company began developing computer software to be sold as a separate product on January 1, year 1. During the planning, coding,
svetlana [45]

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Explanation:

<u>The cost than a business can capitalize will stop once the testing phase is complete.</u>

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<u></u>

The software amount will be 1,300,000 which is the value of the cost incurred in the testing phases

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2 years ago
1. John wants to round 5.64 to the nearest tenth using a number line. He is
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6 0
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Under which of the following circumstances may investment bankers review an equity research report prior to publication
Troyanec [42]

(B) To verify the factual accuracy investment bankers review an equity research report prior to publication.

<h3>What are investment bankers?</h3>
  • A financial institution's investment banker is largely responsible for obtaining cash for firms, governments, or other entities.
  • The investment banking industry is attractive because it pays handsomely.
  • Investment bankers must have great verbal and writing communication skills, as well as the ability to work long and demanding hours.
  • Prior to publication, investment bankers analyze an equities research report to ensure its accuracy.
  • Large, complex financial transactions are facilitated by investment bankers.
  • These transactions may include arranging for a client's acquisition, merger, or sale.
  • Another duty of investment bankers is to issue securities in order to raise capital.

As the description itself says, prior to publication, investment bankers analyze an equities research report to ensure its accuracy.

Therefore, (B) to verify the factual accuracy investment bankers review an equity research report prior to publication.

Know more about investment bankers here:

brainly.com/question/25787830

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Complete question:

Under what circumstances may investment banking personnel review an equity research report prior to publication?

A) To prevent a recommendation that may alienate a client company

B) To verify its factual accuracy

C) Under no circumstances

D) To ensure a favorable recommendation

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