Answer:
The Beta is 1
The required return increases to 13%
Explanation:
The formula for required return is given below:
Required Return = Risk-Free Rate of Return + β(Market Return – Risk-Free Rate of Return)
required return is 11%
risk-free rate of return=7%
Beta is unknown
market return-risk free rate of return is market risk premium is 4%
11%=7%+beta(4%)
11%-7%=beta*4%
4%=beta*4%
beta=4%/4%
beta=1
If the market risk premium increased to 6%,required return is calculated thus:
required return=7%+1(6%)
required return =13%
This implies that the riskier the stock, the higher the market risk premium, the higher the required return to investors.
Answer:
Price of One Bush is $ 23
Explanation:
Suppose
bushes = B
trees = T
According to given condition:
13B + 4T = 487 (Eq: 1)
6B + 2T = 232 (Eq: 2)
Multiplying (Eq: 2) by 2
12B + 4T = 464 (Eq: 3)
Substractign (Eq: 3) from (Eq: 1)
13B + 4T - (12B + 4T) = 487 - 464
13B + 4T - 12B - 4T = 23
B = 23
By putting value of B in (Eq: 1)
(13 x 23) + 4T = 487
299 + 4T = 487
4T = 487 - 299
4T = 188
T = 188 / 4
T = 47
Price of One Bush = B = 23
Answer:
Bugatti Chiron Super Sport
Explanation:
The Bugatti Chiron Super Sport can go 304 MPH
Answer:
National law school of thought
Explanation:
The natural law school of thoughts refers to analyze the behavior of humans also it figured out the moral rule occurs from the behaviors.
It is inherent laws that are applied to all societies, communities, etc also it is common for all whether it is mentioned or officially announced
It should be rational and reasonable too
Therefore the given scenario represents the National law school of thought
Answer:
The WACC before bond issuance is 3.9% and the WACC after bond issuance is 3.71%
Explanation:
In order to calculate the WACC before bond issuance
, we would have to calculate first the cost of equity using capital asset pricing model
.
So Using CAPM we have Rf + Beta x Market risk premium
=
0.5% + 0.85 * 4%
= 3.9%
. cost of equity
Therefore WACC before bond issuance = (Cost of equity x weight of equity + cost of debt (1-tax) x weight of debt)
= 3.9%
. WACC before bond issuance will be equal to cost of equity in this case as there is no debt issue.
In order to calculate the WACC after bond issuance we make the following calculation:
WACC after bond issuance = (Cost of equity x weight of equity + cost of debt (1-tax) x weight of debt)
= (3.9% x 0.9) + (2% x 0.1)
= 3.51% + 0.2%
= 3.71%