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Ivahew [28]
3 years ago
8

NewLinePhone Corp. is very risky, with a beta equal to 2.8 and a standard deviation of returns of 32%. The risk-free rate of ret

urn is 3% and the return on the market is 11%. NewLinePhone's marginal tax rate is 35%. Use the capital asset pricing model to estimate NewLinePhone's cost of retained earnings. 19.7% 23.9% 22.1% 25.4%
Business
1 answer:
PtichkaEL [24]3 years ago
8 0

Answer:

Risk-free rate (Rf) = 3%

Market return (Rm) = 11%

Beta (β) = 2.8

Ke = Rf +β(Rm - Rf)

Ke = 3 + 2.8(11 - 3)

Ke = 3 + 2.8(8)

Ke = 3 +  22.4

Ke = 25.4%

Explanation:

Cost of retained earnings is a function of risk-free rate plus beta multiplied by risk-premium. Risk premium is the difference between market return and risk-free rate,

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Lauren's salary decreases from $ 37,000 to $ 30,000 . She decides to reduce the number of outfits she purchases each year from 2
nikklg [1K]

Answer:

E=-4.0746

Explanation:

Using the midpoint method, Lauren's income elasticity of demand for new outfits is determined by the change in income multiplied by the average number of outfits, divided by the change in the number of outfits multiplied by the average income:

E=\frac{\Delta I*O_{avg}}{\Delta O*I_{avg}}\\E=\frac{(37,000-30,000)*\frac{20+19}{2}}{(19-20)*\frac{37,000+30,000}{2}}\\E=-4.0746

Her income elasticity of demand for new outfits is -4.0746.

8 0
3 years ago
A bakery buys sugar in 15-pound bags. The bakery uses 5000 bags of sugar each year. Carrying costs are $20 per bag per year. Ord
Marianna [84]

Answer:

the total cost of ordering and holding sugar is $1,000 per year

Explanation:

<em>Step 1 Calculate the Economic Order Quantity(EOQ).</em>

EOQ = √(2×Total Demand×Ordering cost)/ Holding Cost per Unit

        = √(2×250×20×5)/20

        = 50

<em>Step 2 Calculate the total  cost of ordering and holding sugar</em>

Total cost = Ordering Cost + Holding Cost

                = (250×20)/50 × $5 + 50/2 × $20

                = $500+$500

                = $1,000

Therefore,  the total cost of ordering and holding sugar is $1,000 per year

3 0
3 years ago
Net income or net loss for a period is calculated by the following formula
V125BC [204]
<span>Revenues–Expenses–Current Debt = Net Profit or Net Loss

</span>
3 0
3 years ago
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Tems11 [23]

Answer:

A-networking

Explanation:

6 0
3 years ago
PLEASE HELP AND QUICKLY!! Why is doing timely reconciliations a key part of internal control activities
daser333 [38]

D and

Definition:

Reconciliation is the process of comparing transactions and activity to supporting documentation. Further, reconciliation involves resolving any discrepancies that may have been discovered.

Purpose:

The process of reconciliation ensures the accuracy and validity of financial information. Also, a proper reconciliation process ensures that unauthorized changes have not occurred to transactions during processing

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2 years ago
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