Answer: The answer is C Monitoring the budget
Answer:
Explanation:
Dividend discount model (DDM) is a method of calculating the cost of equity. The formula is as follows;
cost of equity; r = (D1/P0) +g
whereby, D1= next year's dividend
P0 = Current price of the stock = 27
g = the stock's dividend growth rate = 8% or 0.08 as a decimal
D1 = D0 (1+g)
D1 = 2 (1+0.08) = 2.16
Next, plug in the numbers to the formula
r = (2.16/27)+0.08
r = 0.08 + 0.08
r = 0.16 or 16%
<u>Cost of equity using CAPM</u>
CAPM is Capital asset pricing model. It is also used to estimate the cost of equity.
CAPM; r = risk free + beta ( market risk premium)
r = 0.10 +1.2(0.05)
r = 0.10 + 0.06
r = 0.16 or 16%
Therefore, DDM and CAPM give the same cost of equity.
Answer:
Required:
a. If you require a risk premium of 9%, how much will you be willing to pay for the portfolio?
b. What is the price you will be willing to pay now?
I would say attention getter but i may be wrong... Hope i can help :)
Answer:
The correct answer is option (b) $5400
Explanation:
Solution
Calculation of the cost of direct material on May 1
Now,
The starting work In process inventory = Direct materials Cost + Direct labor Cost + Manufacturing overhead applied on W.I.P
13,500 = Direct materials cost + 4500 + 3600
Thus,
Direct material cost = 13500 - 4500-3600 = $5400
Note: Direct labor cost = 300 * 15 = $ 4500
The manufacturing overhead = 300 hour * $12 = $ 3600
So, only expenses associated to work in process will be considered, hence only direct labor and manufacturing overhead are used to work in process are considered.