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Elena L [17]
4 years ago
10

Your estimate of the market risk premium is 9​%. The​ risk-free rate of return is 3.7​% and General Motors has a beta of 1.7. Ac

cording to the Capital Asset Pricing Model​ (CAPM), what is its expected​ return?
Business
1 answer:
densk [106]4 years ago
7 0

Answer:

19%

Explanation:

The market risk premium is 9%

The risk free rate of return is 3.7%

General motors have a beta of 1.7

Therefore, using the capital asset pticing model the expected return can be calculated as follows

= 3.7% + 1.7×9%

= 3.7% + 15.3%

= 19%

Hence the expected return is 19%

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Computech Corporation is expanding rapidly and currently needs to retain all of its earnings; hence, it does not pay dividends.
Arturiano [62]

Answer: $8.81

Explanation:

To solve this, add the present values of the dividends from years 3, 4 and 5 and then add the present value of the terminal value of the stock at year 5.

Year 3 dividend = $0.50

Year 4 dividend = 0.50 * (1 + 49%) = $0.745

Year 5 dividend = 0.745 * 1.49 = $1.11005

= Dividend in year 3 / (1 + required rate of return)³ + Dividend in year 4 / (1 + required rate of return)⁴ + Dividend in year 5 / (1 + required rate of return)⁵ +   (Dividend in year 5 * (1 + growth rate) / ( required rate of return - growth rate ) ) / (1 + required rate of return)⁵

= 0.5 / 1.16³ + 0.745/1.16⁴ + 1.11005/1.16⁵ + ( 1.11005 / (16% - 9%)) / 1.16⁵

= $8.81

5 0
3 years ago
Smith Company reported pretax book income of $400,000. Included in the computation were favorable temporary differences of $50,0
Hoochie [10]

Answer:

$10,200

Explanation:

The computation of the deferred income tax expense or benefit is shown below:

Favorable temporary difference = $50,000

Less:  Unfavorable temporary difference -$20,000

Net favorable temporary difference $30,000

We assume the tax rate is of 34%

So, the deferred tax expense is

= $30,000 × 34%

= $10,200

By finding out the net favorable temporary difference and then multiplied with the tax rate we can get the deferred tax expense and the same is shown above

3 0
3 years ago
As the winter holiday season was approaching, Margie decided to give each team a window display or an indoor display to decorate
Flura [38]

Answer:

The answer is autonomy (Option D)

Explanation:

Autonomy in human resource management refers to the level or degree of discretion and freedom which an employee is permitted to exercise when performing his/her job.  In other words, it means granting employees the freedom on how to approach work.  

A manager or superior like Margie (in the question) who gives employees autonomy simply gives minimal instruction on what needs to be achieved but allows the employees to go about the job in ways that best suit them.

7 0
3 years ago
Which of the following statements is true about payday loans?????
devlian [24]

Answer:

a.

Explanation:

XSGFKXHIUHDIHGDAOUYGGAOGOAIGHuihifdughoispuhgihgaph

3 0
3 years ago
Read 2 more answers
Carl's monthly take-home pay is $2000, and his monthly rent is $500. if both his monthly take-home pay and his rent increase by
sleet_krkn [62]
5% if I am correct please tell me if I am! Thank you!
4 0
3 years ago
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