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dimaraw [331]
3 years ago
13

"As a financial analyst, you are tasked with evaluating a capital budgeting project. You were instructed to use the IRR method a

nd you need to determine an appropriate hurdle rate. The risk-free rate is 4 percent and the expected market rate of return is 11 percent. Your company has a beta of 1.4 and the project that you are evaluating is considered to have risk equal to the average project that the company has accepted in the past. According to CAPM, the appropriate hurdle rate would be ______%. A. 13.8B. 7C. 15D. 4E. 1.4
Business
1 answer:
notsponge [240]3 years ago
8 0

Answer:

A. 13.8

Explanation:

In this question, we are applying the Capital Asset Pricing Model (CAPM) formula shown below

Expected rate of return = Risk-free rate of return + Beta × (Market rate of return - Risk-free rate of return)

= 4% + 1.4 × (11% - 4%)

= 4% + 1.4 × 7%

= 4% + 9.8%

= 13.8%

The Market rate of return - Risk-free rate of return) is also called as the market risk premium.

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Roger Corporation reports accumulated other comprehensive income of $10 million at 12/31/16. For the year ended 12/31/17, the co
zaharov [31]

Answer:

On 12/31/17, Roger Corporation should report accumulated other comprehensive income of $13 million

Explanation:

Accumulated other comprehensive income account is the port equity section in the balance sheet  and it reports the accumulated unrealized gains / losses of the company.

Accumulated Comprehensive income account:

Opening balance on 12/31/16          = $10 million

Additions for the year ( $15 - $12 )  =<u> $3 million </u>

Opening balance on 12/31/17          =<u> </u><u>$13 million</u>

Net income will be added to retained earning. The Value of total comprehensive income is divided in two parts first Net income and second other comprehensive income. Net income will be transferred to retained earning account and other comprehensive to accumulative comprehensive income account.

3 0
4 years ago
Walmart and Target are the only stores in a remote town that currently stock and sell the PlayStation 5 video game console. Mana
dexar [7]

Answer:

collude with each other

Explanation:

A monopoly market structure is the structure in which the chances of high profit are there. In the case when the two firms and they work together so that the can extract the maximum profits and after that they shared themselves

As in the given question, in the case when Walmart and Target collude with each other so they would charge $1.500 and earned highest profit available

The same would be considered

8 0
3 years ago
Jacinda quit her job as a blackjack dealer where she made​ $42,000 per year to start her own florist business. Her business expe
polet [3.4K]

Answer:

Opportunity costs = 42,000 + 14,000 + 21,000 + 9,000 = $86,000

Explanation:

Opportunity cost is the cost of doing the next alternative.

In this case the opportunity cost would be the profits she has forgone and the costs she incurred to run the florist shop. Personal expenses are not included as we assume apartment and bill costs would be payable regardless of any decision.

Opportunity Costs = Next alternative + Costs of being a florist

Opportunity costs = 42,000 + 14,000 + 21,000 + 9,000 = $86,000

If Jacinda were making profits, we would subtract them from the salary that she could have earned.

Hope that helps.

3 0
4 years ago
Watson Corporation is considering buying a machine for $25,000. Its estimated useful life is 5 years, with no salvage value. Wat
adoni [48]

Answer:

12%

Explanation:

The computation of the accounting rate of return is shown below:

Accounting rate of return = Average profit ÷ Average investment

where

Average profit is

= $1,500 × 5 years ÷ 5 years

= $1,500

And, the average investment is

= $25,000 ÷ 2

= $12,500

So, the accounting rate of return is

= $1,500 ÷ $12,500

= 12%

We simply applied the applied formula

8 0
4 years ago
Explain how organisational policies on equality and diversity translate into day to day activity in the workplace
iren2701 [21]
Every organization has policies on equality and diversity. The organizational policies on equality and diversity impact the day to day activity in the workplace. An organization having a diverse workforce will be able to offer a variety of work skills, potential, ideas and energy. A well diverse workforce will make the organization a better place to work. Equality refers to equal opportunity in an organization irrespective of caste, creed, color, gender, etc.
Workplace policies in respect to equality and diversity allows smooth running of an organization and avoids any bias decisions based on any religion, gender, demography, etc.
When every employee has equal rights and equal chance to achieve their potential then the organization also grows well and success rate improves. 
5 0
4 years ago
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