Answer:
Risk-free rate (Rf) = 8%
Return on market portfolio (Rm) = 15%
Beta (β) = 1.2
Ke = Rf + β(Rm - Rf)
Ke = 8 + 1.2(15 - 8)
Ke = 8 + 1.2(7)
Ke = 8 + 8.4
Ke = 16.40%
Earnings per share (EPS) = $10
Current dividend paid (Do) = 40% x $10 = $4
Retention rate (b) = &6/$10 x 100 = 60% = 0.6
ROE (r) = 20% = 0.2
Growth rate (g) = b x r
= 0.6 x 0.2
= 0.12 = 12%
Current market price (Po)
= Do<u>(1 + g) </u>
Ke - g
= $4<u>(1 + 0.12)</u>
0.1640 - 0.12
= $4<u>(1.12)</u>
0.044
= $101.82
Explanation:
First and foremost, we need to calculate the cost of equity based on capital asset pricing model. Then, we will determine the growth rate, which is a function of retention rate (b) and return on equity(r).
Finally, we will calculate the current market price, which is dividend paid, subject to growth, divided by the excess of cost of equity over growth rate.
Answer:
6.25%
Explanation:
The formula for calculating interest rate is as follows
I= P x R x T
Where
I= interest, P= principal amount, T is time
in this case: I= $60.94, P=$975, T=1 year
Therefore:
$60.94 = $975 x( r/100) x 1
$60.94 =975(r/100) multiply both side by 100 to get rid of the fraction.
6094=975r
r = 6094/ 975
r = 6.2502
interest rate = 6.25%
Answer:
$12,000
Explanation:
Take 20 pieces $20 average price per piece 30 days
= $12,000 expected sales for the month
Answer:
Explanation:
The journal entry is shown below:
Interest expense A/c Dr $3,000
To Interest payable A/c $3,000
(Being interest is recorded)
The computation of the interest expense is shown below:
= Principal × rate of interest × number of months ÷ total number of months in a year
= $125,000 × 6% × (4 months ÷ 12 months)
= $2,500
The four-month is calculated from the September 1 to December 31
Answer:
conglomerate
Explanation:
In simple words, A conglomerate refers to the multi-industry corporation, which is a mixture of many enterprises operating within one organizational group in completely different sectors, which can include a holding company and several branches.
The conglomerates are always global and massive. The predominant conglomerates consolidate financial risk through investing in a variety of different industries, although other conglomerates opt to engage in a single sector, like those in mines.
