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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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Farmco just paid its annual dividend of $.32 per share. The dividends are expected to grow at 25 percent annually for the next 4
vitfil [10]

Answer:

$5.73(Approx).

Explanation:

Given:

= 0.32

Growth rate = 25% = 0.25

Number of year = 4

Growth rate after 4 year = 3% = 0.03

Required rate of return = 15% = 0.15

Computation of divined in 4 year:

Annual\ dividend\ paid(1+growth\ rate)^n\\\\0.32(1+0.25)^4\\\\0.32(1.25)^4\\\\0.32(2.44140625)\\\\0.78125

Price of stock after year 4 = [Divined in 4 year × (1 + new growth)] /[Required rate of return - Growth rate after 4 year ]

Price of stock after year 4 = [0.78125 × (1+0.03)] / [0.15 - 0.03]  

Price of stock after year 4 = [0.8046875] / [0.12]  

Price of stock after year 4 = $6.70572917

Present value = Future value / (1+r)^n

 Present value = $6.70572917 / (1.15)^4

 Present value = $6.70572917 / (1.16985856)

$5.73(Approx).

6 0
3 years ago
Delta Lighting has 30,000 shares of common stock outstanding at a market price of $15 a share. This stock was originally issued
pochemuha

Answer:

the weighted average cost of capital is 11.57 % .

Explanation:

Market Value of Equity = Number of Common Shares Outstanding × Market Price per share

                                      = 30,000 shares × $15

                                      = $450,000

Market Value of Debt = Face Value × 82%

                                    = $280,000 × 82%

                                    = $229,600

WACC = Ke × (E/V) + Kd × (E/V)

           = 14.00 % × ($450,000/ $679,600) + 6.80 %  × ($229,600/ $679,600)

           = 9.27 % + 2.30 %

           = 11.57 %

3 0
3 years ago
How many McDonalds are in America
Anastaziya [24]
36,899 macdonalds i think in america
4 0
3 years ago
Read 2 more answers
To create meaningful on social media content that will resonate with audiences, businesses engage in ______________, which is th
Margaret [11]

Answer:

I think the answer ought to be B. Social listening

Explanation:

By definition social listening is Social media measurement, 'social media monitoring' or social listening is a way of computing popularity of a brand or company by extracting information from social media channels. So that seems to be the best fit.

5 0
3 years ago
Conduct research and create a 5 paragraph essay that explains how consumers can protect themselves from fraudulent and deceptive
snow_lady [41]

Answer: Reading the fine print: the producer would always make available fine print on their products which distinguishes them from other's, the consumer is expected to take note of that.

Explanation:

Fraudulent practise are being on the increase in business now, as many want to imitate firms and make gains out of their products. The following are what consumers can look out for to help them against this fraudulent practise.

1) Do not call list; the producer would make available how they can be reached and would want the consumer to reach them by such ways.

2) Reading the fine print: the producer would always make available fine print on their products which distinguishes them from other's, the consumer is expected to take note of that.

3) Terms and conditions: although this can be imitated but the producer has a unique way they would do theirs which the consumer should be aware of.

4) Personal information disclosures: when considering services, there will be need for releasing personal information, the customer should verify who they release information to.

7 0
3 years ago
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