The private market will produce more than the economically efficient output level. Also when there is a negative externality then the cost to producers will be less than the cost to society. Remember that a negative externality is a cost that is suffered by a third party as a result of an economic transaction. Also have in mins that externalities lead to market failure<span> because the price equilibrium </span>does<span> not reflect the true costs and benefits of a product.</span>
Answer:
MILLER STORES
Ke = Rf + β(Market risk premium)
12.7 = Rf + 1.38(7.4)
12.7 = Rf + 10.212
Rf = 12.7 - 10.212
Rf = 2.488%
DIVISION A
Ke = Rf + β(Risk premium)
Ke = 2.488 + 1.52(7.4)
Ke = 2.488 + 11.248
Ke = 13.74%
Explanation:
First and foremost, we need to calculate risk-free rate using the data relating to Miller Stores. In this case, the cost of equity, beta and market risk premium of Miller Stores were provided with the exception of risk-free rate. Then, we will make risk-free rate the subject of the formula.
We also need to calculate the cost of capital of division A, which is risk-free rate plus beta multiplied by the market risk-premium.
Answer:
c. under both the capital stock and additional paid-in capital sections
Explanation:
In the given question, the corporation issued 40,000 shares for $50 par value and for cash $60 per share
So, it affects the two accounts, one is preferred stock and the second is additional paid-in capital.
The preference stock should be increased by $2,000,000 (40,000 shares × $50)
Whereas the difference of $400,000 (40,000 shares × $10) would be transferred to additional paid in the capital account
And, the preferred stock has come under a capital stock account that's why we considered both the things
