The market risk premium of Fund P will be 5.5%.
<h3>How to calculate the market risk premium?</h3>
It should be noted that as per CAPM, the return in stock will be:
= Risk free rate + Beta × Market risk premium
8.90% = 4.5% + 0.8 × Market risk premium.
Market risk premium = 5.5%
In conclusion, the market risk premium of Fund P will be 5.5%.
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Answer:
$4.5
Explanation:
Interest to be capitalized=$90*6%*10/12=$4.5
As the loan was outstanding from January to October 2021, therefore interest is worked out for 10 months.
Please note that interest of only those debt instruments are capitalized which have been obtained to finance any construction project under the specific interest method.
In our example $90 is the construction loan therefore only this loan's interest is capitalized.
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Answer:
Economies of Scale refer to the cost advantage experienced by a firm when it increases its level of output. The advantage arises due to the inverse relationship between per-unit fixed cost and the quantity produced. The greater the quantity of output produced, the lower the per-unit fixed cost.
Explanation:
