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3 years ago

Suppose you observe the following situation:

Business

1 answer:

Finger [1]3 years ago

3 0

Answer:

a. The expected return on the market is 10.89%

b. The risk-free rate is 1.52%

Explanation:

In order to calcuate the expected return on the market and the he risk-free rate we would have to use the following formulas:

Expected return=risk-free rate +Beta*(market rate- risk-free rate )

13.23=Rf+1.25*(Rm-Rf)

13.23=1.25Rm-0.25Rf

Rm=(13.23+0.25Rf)/1.25

To calculate the risk free rate, we use the following:

9.67=Rf+0.87*(Rm-Rf)

9.67=0.13Rf+0.87Rm

9.67=0.13Rf+0.87*(13.23+0.25Rf)/1.25

9.67=0.13Rf+9.20808+0.174Rf

Rf=(9.67-9.20808)/(0.13+0.174)

=1.52%(Approx)=risk free rate

Rm=(13.23+0.25Rf)/1.25

=10.89%(Approx)=market rate

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skelet666 [1.2K]

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3 years ago

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olasank [31]

Answer: $50,846.3701

Explanation:

Need to save $4 million to live comfortably,

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3 years ago

HEEELP!!!!

Zepler [3.9K]

use a calculator sorry

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3 years ago

On January 1, a machine with a useful life of five years and a residual value of $5,000 was purchased for $25,000. What is the d

emmasim [6.3K]

Answer:

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= ($20,000) ÷ (5 years)

= $4,000

In this method, the depreciation is same for all the remaining useful life i.e $4,000 is charged for remaining three years

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2 years ago