Answer:
Cost of equity = 19.1
%
Explanation:
Cost of equity = required rate of return + flotation cost
The Capital assets pricing model would be used to determined the required rate of return
<em>The capital asset pricing model (CAPM): relates the price of a share to the market risk or systematic risk. The systematic risk is that which affects all the all the economic agents, e.g inflation, interest rate e.t.c </em>
Using the CAPM , the required rate of return is given as follows:
E(r)= Rf +β(Rm-Rf)
E(r) - required return
β- Beta
Rm- Return on market
Rf- Risk-free rate
DATA
E(r) =? , Rf- 3%, Rm-14% , β- 1.1, flotation cost - 4%
E(r) = 3% + 1.1× (14% - 3%) = 15.1
%
Cost of equity = required rate of return + flotation cost
= 15.1
% + 4% = 19.1
%
Cost of equity = 19.1
%
Answer:
A. The trade-off a firm faces when using retained earnings or borrowed funds is the same.
Explanation:
- A trade-off is based on the situational decisions that usually involve the loss of quality and a property that is set or designed to give a return in the other aspects.
- As one part has to increase and the other has to decrease. The trade-off is commonly expressed as in the terms of opportunity costs which states the loss of the best alternative.
Answer:
(A) Creativity
(C) Productivity
(D) Satisfaction
Explanation:
Liability: The liability is the amount that is due to someone. It means you have full responsibility for a thing you promised to someone.
Lawsuits: When some one sue to another for not giving the amount, or by any other reason is called law suits
In the given scenario, for diversity in the workforce, the creativity, productivity, and satisfaction level is more important through which the employees can give their best due to which, the objective of an organization can be achieved in an efficient and effective manner.
The other two give a negative impact on the organization's reputation, so it will not be considered.
Answer:
An increase in the production leads to decline in the price. Producers are likely to supply more at the lower price or the existing price, considering the increase in production. If there is a 20 percent increase in the production, then it tends to increase the supply. An increase in supply will have a negative impact on price.
The effect of the increase in production on price is shown in the above figure. A twenty percent increase in the production causes an increase in the supply. Excessive supply causes a reduction in the price. Hence, when the supply increases from P1 to Q2, the price decreases to P2 from P1.
Based on the scenario, it is likely that Joe has made a non-programmed
decision in a way of implementing a programmed decision.
A programmed decision is a way of deciding that is easy in
regards of the individual to decide in a certain decision where as a
non-programmed decision is a way of using logic in which there is high risk
level involved in a decision.
