The global economy of the 21st century can be summarized as: <span>an economic system that is more favorable for international business. Trade and imports are at an all time high, especially into the United States from places like China, Japan, and Hong Kong.</span>
Answer: Option C
Explanation: In simple words, cost of capital refers to the amount of return that the investor are expecting for tasking the risk of investing in the company. In other words, it is the amount the company has to offer in return to the investors for attaining the capital from the market.
Often the cost of capital is used to evaluate the profitability of the project, that is, if the return in project is higher than the cost of financing it should be taken by the company.
However there are other component while evaluating a project that is risks associated with it. Risk of every projects is different from the other and hence only those project should be evaluated on the basis of cost of capital that is similar to the company's average.
Answer:
Sales Revenue – Cost of Goods Sold = gross profit
Explanation:
A merchandising business is one that is involved in selling goods to customers. The firm may purchase or produce the goods it sells. Merchandising firms report an expense named the cost of goods sold COGS. This cost represents the total cost of all goods sold to customers during a period.
Costs of goods sold include the direct cost associated with the merchandise. Calculation of COGS is by adding net purchases to the opening stock then subtracting ending stock. The cost of goods sold is used in calculating gross profit. Service firms do not report this cost as they do not sell goods.
Answer:
Final balance = $ 14,272.93
Explanation:
Annual Deposits(PMT) = $1,000
Number of years(N) = 12
Rate of interest (r) = 3.1% = 0.031
Future Value = ?
Computation:
Final balance = $ 14,272.93
Answer:
Cost of Equity =11.56%
Explanation:
The cost of equity can be determined using any of the following methods:
- The Dividend Valuation Model(DVM)
- Capital Asset Pricing Model (CAPM)
The Dividend Valuation Model(DVM) is a technique used to value the worth of an asset.
According to this model, the value of an asset is the sum of the present values of the future cash flows would that arise from the asset discounted at the required rate of return.
Price = D/Kp
D- Dividend payable
Kp- cost of preferred stock
The capital asset pricing model (CAPM): relates the price of a share to the market risk or systematic risk. The systematic risk is that which affects all the all the economic agents, e.g inflation, interest rate e.t.c
This CAPM is considered superior to DVM because it incorporates risk. Hence, we will use the CAPM
Using the CAPM , the expected return on a asset is given as follows:
E(r)= Rf +β(Rm-Rf)
E(r) =? , Rf- 2.90%, Rm-Rf- 7.10% β- 1.22
E(r) = 2.90% + 1.22×(7.10)% = 11.562 %
Cost of Equity =11.56%