Answer a) The letter b is best described as the estimate of the cost for an additional customer visit.
Answer b) The letter y is best described as the observed store cost for a given month.
Answer c) The letter x is best described as observed customer visit for a given month.
Answer d) The estimated cost for 370 customer visits is
Y = a + bx
a =$ 687.65 b = $ 7.59 x = 370 customer visits
Y = $ 687.65 + ($ 7.59 * 370 customer visit) = $ 687.65 + $ 2,808.3 = $ 3,495.95
Answer e) The percent of total variance that can be explained by regression equation is R2 = 0.79754 or 79.754%
The type of advertisement that is most likely to make somebody submit their ad far in advance would be direct mail advertising.
Direct ads for short.
Answer:
a) WACC = 12.20%
Explanation:
Weighted average cost of capital is computed by allocating weights to different capitals.
Cost of bonds = Cost of debt = 5%
Cost of preferred stock = 9%
Cost of equity = 16%
As it is new issued and not from retained earnings.
With weights cost will be as follows
Bonds = 5% X $5/$20 = 1.25%
Preference share = 9% X $3/$20 = 1.35%
Equity = 16% X $12/$20 = 9.6%
WACC = 1.25 + 1.35 + 9.6 = 12.20%
Answer:
The price of the put-option on the same stock with the same strike price is $3.75.
Explanation:
To find the price of the put option on an underlying asset given the price on the call option's price for the same underlying asset with the same strike price is given, we apply put-call parity model.
Put call parity model: p = K x e^(-rT) + c - St .
in which: p: put option's price;
K: underlying asset's strike price;
r: risk-free rate;
T: time to maturity denominated in year;
c= call option's price;
St = spot price of underlying asset .
So, p = 50 x e^(-0.06 x 1/12) + 1 - 47 = $3.75 .
