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Radda [10]
3 years ago
8

Ethier Enterprise has an unlevered beta of 1. Ethier is financed with 55% debt and has a levered beta of 1.1. If the risk free r

ate is 6% and the market risk premium is 4%, how much is the additional premium that Ethier's shareholders require to be compensated for financial risk? Round your answer to two decimal places.
Business
1 answer:
tresset_1 [31]3 years ago
6 0

Answer:

The correct answer is 0.4%.

Explanation:

According to the scenario, the computation for the given data are as follows:

If no debt, then required return can be calculated by using following formula:

Required return ( no debt) = Risk free rate + Unlevered Beta × Market risk premium

= 6% + 1 × 4%

= 0.06 + 0.04

= 0.10 or 10%

If debt, then required return can be calculated by using following formula:

Required return ( with debt) = Risk free rate + levered Beta × Market risk premium

= 6% + 1.1 × 4%

= 0.06 + 0.044

= 0.104 or 10.4%

So, extra premium required = 10.4% - 10% = 0.4%

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Andrew [12]

Answer:

C. The Withdraw Style

Explanation:

The Withdraw or Avoid style is a style that completely evades a conflict. This style is mostly used or appropriate in the following conditions:

  • when the conflict is judged to be trivial, as in the question, Xena sees the issue as a trivial
  • it doesn't require much time to think,
  • the person invloved does not see the chance of winning the arguments in the conflict or
  • there is a fear of being met with resentment.

In the withdraw style, the conflict can be postponed indefinely or completely avoided anytime it comes up, In this style, the person involved oes not also see the need to pursue or enforce any beliefs but just allows the issue to go as it is.

Other styles include: Accomodating, Collaborating and Competing.

7 0
3 years ago
The school zone has posted speed limits of 25mph during school hours. Define Incentives, and provide an example of one negative
AURORKA [14]

Answer:

To encourage someone to do something.

Explanation:

Incentives is defined as a thing that encourages someone to do something. One negative incentive is to charge a big fine on the motorists for the high speed in the school hours so that they obey the laws strictly while on the other hand, example of positive incentive is to give rewards or gifts or medals to those who obeys the law of speed limits in the school hours.

8 0
2 years ago
PLEASE HELP : Which of these investments may be long term? Check all that apply.
Stels [109]

Answer:

mutual funds

bonds

retirement funds

commodities

Explanation: i just took it

3 0
3 years ago
A product that represents a novel idea requiring little financial investment would be displayed in the ________ of the entrepren
Anit [1.1K]

Answer:

upper-left quadrant

Explanation:

A product that represents a novel idea requiring little financial investment would be displayed in the <u>upper-left quadrant</u> of the entrepreneurial strategy matrix.

A model of entrepreneurial venturing uses a four-cell matrix to identify proper business strategies. This matrix involves reducing risks and increasing innovation within a cell.

4 0
3 years ago
2017 2016 Net sales $ 1,110,000 $ 1,116,500 Net income (loss) 62,000 50,700 Total assets 855,338 838,078 Share information Share
mixer [17]

Answer:

Earnings per share 2016 = $0.00073

Earnings per share 2017 = $0.00095

Explanation:

Earnings per share relates to a period and not for a particular date, therefore, it is computed based on the average number of shares for the period.

Net income for each year

2017 = $62,000

2016 = $50,700

Shares at the end of year

2017 = 64,507,000

2016 = 66,282,000

2015 = 73,139,000

Average shares of 2016 = \frac{(73,139,000 + 66,282,000)}{2} = 69,710,500

Average shares of 2017 = \frac{(64,507,000 + 66,282,000)}{2} = 65,394,500

Earning per share for 2016 = \frac{50,700}{69,710,500} = $0.00073

Earnings per share for 2017 = \frac{62,000}{65,394,500} = $0.00095

7 0
3 years ago
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