1answer.
Ask question
Login Signup
Ask question
All categories
  • English
  • Mathematics
  • Social Studies
  • Business
  • History
  • Health
  • Geography
  • Biology
  • Physics
  • Chemistry
  • Computers and Technology
  • Arts
  • World Languages
  • Spanish
  • French
  • German
  • Advanced Placement (AP)
  • SAT
  • Medicine
  • Law
  • Engineering
mafiozo [28]
3 years ago
11

Miller Stores has an overall beta of 1.38 and a cost of equity of 12.7 percent for the company overall. The firm is all-equity f

inanced. Division A within the firm has an estimated beta of 1.52 and is the riskiest of all of the company's operations. What is an appropriate cost of capital for Division A if the market risk premium is 7.4 percent? Multiple Choice 13.12 percent 13.74 percent 12.63 percent 12.77 percent 13.01 percent
Business
1 answer:
mojhsa [17]3 years ago
8 0

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.

You might be interested in
Exercise 4-11 Computing net sales for multiple-step income statement LO P4 A company reports the following sales-related informa
dezoksy [38]

Answer:

Net sales revenue= 220,100

Explanation:

Giving the following information:

Sales, gross $ 245,000

Sales returns and allowances $ 20,000

Sales discounts 4,900

Sales salaries expense 10,900

<u>Sales salaries expense is not a part of the net sales in a multiple-step income statement. The net sales are as follow:</u>

Sales= 245,000

Sales returns and allowances=  (20,000)

Sales discounts= (4,900)

Net sales revenue= 220,100

4 0
3 years ago
'As fewer people buy gym memberships, the demand for running shoes will decrease and the price of a pair of running shoes will i
olchik [2.2K]

Answer: "The rise in the price of a pair of running shoes will increase the supply of running shoes".

This statement is <u><em> false</em></u> because <em><u>a decrease in demand for running shoes does not increase the price of a pair of running shoes and an increase in the price of a pair of running shoes does not increase the supply of running shoes. </u></em>

This occurs as the price of a pair of running shoes increases,therefore decreasing the demand and thus the supply will not increase.

4 0
2 years ago
Fleesum recently began using cross-functional teams. Dee wants to make sure the teams collaborate effectively, but also wants to
Mariulka [41]

Answer:

use a skill-based pay plan for the teams.

Explanation:

Based on this scenario it can be said that the best method for Dee to use would be a skill-based pay plan for the teams. A Skill-based pay (SBP) is a unique compensation method that is designed to reward individual employees with additional pay in exchange for formal certification of the employee's mastery of skills, knowledge, and/or competencies. This will promote individual initiative without suppressing a cooperative work environment.

8 0
3 years ago
Place holders are...
Leokris [45]

place·hold·er

[ˈplāsˌhōldər]

NOUN

mathematics

a significant zero in the decimal representation of a number.

a symbol or piece of text used in a mathematical expression or in an instruction in a computer program to denote a missing quantity or operator.

linguistics

an element of a sentence that is required by syntactic constraints but carries little or no semantic information, for example the word it as a subject in it is a pity that she left, where the true subject is that she left.

3 0
3 years ago
Concept maps work because they _______. a. are colorful and interesting b. can be drawn by almost anyone c. visually demonstrate
stich3 [128]

Answer:

concept maps work because they <u>visually demonstrate relationships</u>

8 0
2 years ago
Other questions:
  • Ferris Company began January with 7,000 units of its principal product. The cost of each unit is $8. Merchandise transactions fo
    12·1 answer
  • true or false all companies will have at least one accounted titled building in their list of accounts
    9·1 answer
  • What are the advantages a market economy offers producers?
    15·2 answers
  • Alert Security Services Co. offers security services to business clients. The trial balance for Alert Security Services Co. has
    9·1 answer
  • Lucy's Music Emporium opened its doors on January 1, 2015, and it was granted permission to use the same depreciation calculatio
    11·1 answer
  • The management process is complex. The management functions include
    13·1 answer
  • A product in the __________ stage of the product life cycle has a high number of competitors and competitive products.
    12·1 answer
  • Need help fast!!!!!!!! :(
    6·1 answer
  • The owner of an undeveloped lot agrees to sell the lot to a buyer. The written agreement identifies the parties, describes the p
    12·1 answer
  • The major activity in strategic planning is the analyses of a business​ __________.
    10·1 answer
Add answer
Login
Not registered? Fast signup
Signup
Login Signup
Ask question!