Answer:
20.1%
Explanation:
In capital asset prcing model (CAPM), cost of equity (or cost of retained earnings in this context) is calculated as below:
<em>Cost of equity = risk-free rate of return + beta x (market index return - risk-free rate of return)</em>
Please note that <em>(market index return - risk-free rate of return)</em> is equal to <em>market risk premium</em>
Putting all the number together, we have:
Cost of equity/retained earnings = 2.5% + 2.2 x 8% = 20.1%
<em>Note: The dividend growth rate, tax rate & stock standard deviation is not relevant in answering the question.</em>
Answer:
Here:
Explanation:
Purchase price of shares = 24000
total purchase cost = price of shares bought + broker fees total purchase cost = 24000 + 0.01*24000 =24240
selling price of shares = 29100
total selling cost = price of shares sold - broker fees total selling cost = 29100 - 35 = 29065
Net proceeeds = total selling cost - total purchase cost Net proceeds = 29065 - 24240 = 4825
Answer:
Donna made a realized gain of 8,000 dollars
the basis for the building now will be of 152,000 dollars
Explanation:
<u><em>realized gain:</em></u>
insurance proceeds less replacement cost:
160,000 - 152,000 = 8,000
<em><u>the basis</u></em> (value of the new office building for tax purposes) will be the 152,000 which is the cost of the office building
Answer:
Their combined production should be 20 clothes and 12 wines.
Explanation:
<u>Argentina's opportunity cost to produce 1 unit of cloth = 0.1 wine</u>
Argentina's opportunity cost to produce 1 unit of wine = 10 clothes
Chile's opportunity cost to produce 1 unit of cloth = 0.5 wine
<u>Chile's opportunity cost to produce 1 unit of wine = 2 clothes</u>
Since Argentina' opportunity cost to produce clothes is lower, then it should specialize int he production of clothes. While Chile should specialize in the production of wine. Their combined production should be 20 clothes and 12 wines.
