YES ALL MAJOR COMMITTES AND BOARDS OF THE GENERAL FRATERNITY
Answer:
By definition, we know that Beta for market Portfolio is 1. By this, we need weighted average of J and K Beta as 1
1.38x + 0.93(1-x) = 1
1.38x + 0.93-0.93x = 1
0.45x = 0.07
x = 0.07/0.45
x = 0.16
So, we need 0.16 of J and 0.84 of K.
Weighted Average of J = 0.16 and K = 0.84.
Further Expected return of portfolio will be:
Weight Expected Return Expected Return of Portfolio
J 0.16 14.06 2.25
K 0.84 11 <u>9.24</u>
Total Portfolio Expected Return <u>11.49</u>
Answer:
13.86%
Explanation:
WACC = cost of equity x percentage of equity + (cost of debt x percentage of debt x ( 1 - tax rate))
0.65 x e + (9 x 0.6 x 0.35) = 10.90
cost of equity = 13.86%
Answer:
Find attached amortization schedule for the interest expense and discount amortization under both methods.
Explanation:
Under straight line the discount amortization per year is total discount on bonds payable divided by 5 years.
Under effective method, I first of all computed the yield to maturity on the bind using rate formula in excel, the discount amortization each is the interest expense minus the coupon payment.