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adelina 88 [10]
3 years ago
8

Darren has the option of investing in either Stock A or Stock B. There is a 45 percent chance that the return on Stock A will be

25 percent, a 25 percent chance it will be 14 percent, and a 30 percent chance it will be 4 percent. There is a 45 percent chance that the return on Stock B will be 30 percent, a 25 percent chance it will be 9 percent, and a 30 percent chance it will be2 percent. What is the expected rates of return on Stock A and Stock B?
Business
1 answer:
saw5 [17]3 years ago
7 0

Answer:

15.95 %

16.35 %

Explanation:

Stock A.

Given:

Return expectation r1 = 45%

Probability expectation p1 = 25%

Return expectation r2 = 25%

Probability expectation p2 = 14%

Return expectation r3 = 30%

Probability expectation p3 = 4%

Expected Rate of Return = r1p1 + r2p2 + r3p3.........

= (45% x 25%) + (25% x 14%) + (30% x 4%)

= 11.25% + 3.5% + 1.2%

= 15.95 %

Stock B.

Given:

Return expectation R1 = 45%

Probability expectation P1 = 30%

Return expectation R2 = 25%

Probability expectation P2 = 9%

Return expectation R3 = 30%

Probability expectation P3 = 2%

Expected Rate of Return = R1P1 + R2P2 + R3P3.........

= (45% x 30%) + (25% x 9%) + (30% x 2%)

= 13.5% + 2.25% + 0.6%

= 16.35 %

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The highest value of total cost was $ 710 comma 000 in June for Horchata​ Beverages, Inc. Its lowest value of total cost was $ 5
marta [7]

Answer:

A. $ 450 comma 000

Explanation:

In order to compute the fixed cost per month first we have to determine the variable cost per unit which is shown below.

Variable cost per hour = (High total  cost - low total cost) ÷ (High production volume - low production volume)

= ($710,000 - $550,000) ÷ (13,000 units - 5,000 units )

= $160,000 ÷ 8,000 units

= $20

Now the fixed cost equal to

= High total cost - (High production volume × Variable cost per unit)

= $710,000 - (13,000 units × $20)

= $710,000 - $260,000

= $450,000

We simply applied the above formula

6 0
3 years ago
What are long-term decisions that set the direction for the entire organization called?a. Tactical b. Operational c. Directional
kvv77 [185]

Answer:

The correct answer is letter "E": Strategic.

Explanation:

Strategic decisions imply analyzing what direction is the overall company going to take in the long run. It represents the groups of decisions high-rank executives must take to conduct the operations of the firm, the resources that will be used and how they will combine those factors to reach the organization's objectives.

8 0
3 years ago
A list of financial statement items for Blossom Company includes the following:
cricket20 [7]

Answer:

Total current assets            $83,580

Explanation:

The preparation of the current assets section of the balance sheet is shown below:

<u>Current Assets                  Amounts </u>

Cash                                   $22,360

Debt investments(short term) $17,360

Accounts receivables     $30,100

Supplies                             $8,170

Prepaid Insurance              $5,590

Total current assets            $83,580

5 0
3 years ago
Which of the following statements regarding SPT and WSPT is INCORRECT?
Alex Ar [27]

Answer:

D

Explanation:

WSPT assigns the highest priority to the job with the LOWEST weight/processing time ratio.

4 0
3 years ago
Jim is evaluating project that will pay him $5,000 per year for 5 years, and then cost him $4,000 per year for 12 years. Jim’s o
FinnZ [79.3K]

Answer:

4.25%

Explanation:

We need to calculate the net present value of the cash flows to determine the  IRR.

NPV = PV of Cash inflows - PV of Cash outflows

As the cash inflow and outflow are fixed for specific period of time so, we will use the annuity formula to calculate the NPV.

NPV = [ $5,000 x ( 1 - ( 1 + 18% )^-5) /18% ] - [ ( $4,000 x ( 1 - ( 1 + 18% )^-12) /18%) x ( 1 + 18%)^-6 ]

NPV = $15,636 - $7,102 = $8,534

We need NPV on a higher rate of 10%

NPV = [ $5,000 x ( 1 - ( 1 + 10% )^-5) /10% ] - [ ( $4,000 x ( 1 - ( 1 + 10% )^-12) /10%) x ( 1 + 10%)^-6 ]

NPV = $18,954 - $15,385 = $3,569

IRR = Lower rate + [ Lower rate NPV / (Lower rate NPV - Higher rate NPV) ] (higher rate - lower rate)

IRR = 10% + [ 3,569 / ($3,569 - $8,534) ] (18% - 10%)

IRR = 4.25%

4 0
3 years ago
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